Directors: Pay

(asked on 20th July 2017) - View Source

Question to the Department for Business, Energy and Industrial Strategy:

To ask the Secretary of State for Business, Energy and Industrial Strategy, what plans he has to make executive pay packages subject to annual votes by shareholders.


Answered by
Margot James Portrait
Margot James
This question was answered on 5th September 2017

The Government published its response to consultation on the Green Paper on Corporate Governance Reform on 29th August.

The response sets out the Government’s plans to introduce secondary legislation to require quoted companies to report annually the ratio of CEO pay to the average pay of their UK workforce along with a narrative explaining changes to that ratio from year to year and setting the ratio in the context of pay and conditions across the wider workforce.

Companies already face a binding vote on their executive remuneration policy at least once every three years, and must win a binding shareholder vote for any executive pay proposals that deviate from that policy. Most listed companies secure strong backing from their shareholders for their executive pay arrangements and are sensitive to shareholder concerns.

A minority, however, do not respond adequately to shareholder concerns. The Government has therefore invited the Financial Reporting Council to revise the UK Corporate Governance Code to be more specific about the steps that premium listed companies should take to understand and address shareholder concerns when they encounter significant opposition to their executive pay policies and awards.

The Government has also invited the Investment Association to implement a proposal made in its response to the Green Paper to maintain a public register of listed companies encountering shareholder opposition to pay awards of 20% or more. This will be accompanied by a record of what these companies have said they are doing to address shareholder concerns. The Government will monitor the impact of these measures.

A copy of the Government’s response to consultation on the Corporate Governance Reform green paper can be found at https://www.gov.uk/government/consultations/corporate-governance-reform.

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