May to Outline U.K. Plans to Rein In Excessive Executive PayBy
U.K. premier seeking to target ‘corporate irresponsibility’
Report issued last week called high pay ‘socially divisive’
U.K. Prime Minister Theresa May will outline plans this fall to clamp down on “excessive” executive pay, after one of her lawmakers last week criticized high compensation levels for FTSE 100 bosses as “socially divisive.”
“To restore greater fairness, we will bring forward a consultation this autumn on measures to tackle corporate irresponsibility, cracking down on excessive corporate pay and poor corporate governance,” May told a news conference on Monday after the Group of 20 summit in Hangzhou, China. The proposals will also include giving employees and customers representation on company boards.
Conservative lawmaker Chris Philp said in a report published Thursday that “rocketing” executive remuneration is fueling public resentment and there’s evidence that high pay leads to poor investment returns. The study for the High Pay Centre found that the average FTSE 100 chief executive officer is paid 6 million pounds ($8 million) a year, 150 times the income of the average worker.
Pay ratios should be published and shareholders should hold annual binding votes on compensation, as in Switzerland, the Netherlands and Denmark, Philp’s report recommended. May has previously spoken of the “irrational, unhealthy and growing gap” between top bosses and their employees.
May said she’d found interest among other G-20 leaders, including Australia’s Malcolm Turnbull, in her plans for tackling corporate irresponsibility. “We need to make sure that the global economy works for everyone,” she told reporters. At the moment, there is “the feeling for some people that globalization has left them behind.”