GOVERNMENT plans to push companies to be more transparent about executive pay have been welcomed by the Church Commissioners.
A Green Paper published on Tuesday by the Department for Business, Energy and Industrial Strategy includes measures to increase shareholders’ influence over levels of executive pay, and to publish pay ratios that compare the pay of chief executives to that of other employees. The High Pay Centre estimates that the average chief executive earns £5 million a year, about 180 times the average employee.
The Commissioners’ head of responsible investment, Edward Mason, said on Tuesday: “We welcome the Government’s proposals on executive pay. . . Our executive-remuneration policy outlines the basis on which we engage with companies on this issue, and we have been calling for pay ratios to be published since 2013.”
The Commissioners’ executive remuneration policy includes relating executive pay to long-term performance, and challenging the size of annual bonuses.
The Commissioners’ 2015 Annual Report, published in May, showed that they supported only 32 per cent of remuneration packages at UK companies in which they have a holding. In 2014, they supported 34 per cent (News, 22 May, 2015).
The Green Paper also proposes creating “stakeholder advisory panels”, made up of workers and consumers, among others. These would not have “direct input into board decisions”, but “would offer greater transparency into how well a company is addressing its stakeholder issues”.
The Government had previously indicated that companies would be forced to include workers and consumers on their boards. There have been signals that the Government was pulling back from this proposal, and last week the Prime Minister told the CBI that this would not happen.
The secretary-general of Co-operatives UK, Ed Mayo, commented: “The options now on the table are far more limited than the original ambition of the Government’s corporate-governance reforms, and may prove significantly harder to make work in law than the cleaner and simpler model of having employee directors in the boardroom.”