New government proposals will make Britain’s largest companies to reveal the pay gap between their CEOs and average workers,
It is one of the measures considered by the government in its consultation on curbing corporate pays.
Other measures are bettering the effectiveness of remuneration committees and votes on pay packages.
The government’s paper, aims to increase public trust in business in the face of
the rise in anti-globalisation and anti-business sentiment.
The proposals in the paper are:
Forcing companies to publish the difference in earning between the chief executive and average employee.
Improving the effectiveness of compesations and to what extent they must consult shareholders
and the wider company on pay.
Executive pay packages must have binding votes.
Part of the plan is reform the remuneration committees, the government is wondering whether employees’
representatives should be given an advisory role.
Officials believe their input would spell out to the committee the impact on the wider workforce of
high levels of remuneration for top executives.
In September trade union body (TUC) said its research showed the average FTSE 100 boss was paid 123 times the average
full-time salary, and that the median pay for the major FTSE 100 directors had risen by 47% in five years to 2015 to £3.4m.
A source from the goverment said: “Businesses are a pillar of our society, creating employment opportunities and contributing
significantly to funding our country’s public services.
“The UK has led the world in corporate governance, but also our strong reputation can only be maintained if government
and business regularly reviews and upgrades our governance.
“Good governance helps companies take better decisions, for their own long-term benefit and the economy overall –
while ensuring public trust in British business and making sure the UK is the best place in the world to do business.”
Mrs May was forced to reject claims she had watered down plans for
workers to have a say in how their companies are run, because of this was the publication of the green paper .
She dismissed imposing the appointment of employees to company boards when she gave a talk to the CBI this week.
Andy Haldane, who is the Bank of England’s chief economist, joined company chiefs to reject proposals
for annual binding votes on pay and the publication of pay ratios.
Those two ideas were one of the prime minister’s suggestions to address public unease about executive pay.
Report by the Big Innovation Centre think tank argued that a binding vote would mean Britain’s top firms
losing out on top talent.
It expressed that pay ratios do not “lend themselves to valid comparisons between companies”
because it most likely add to misunderstanding over executive pay as well as potentially creating “perverse incentives”.