UK to legislate on top pay
by Diarmaid Mac a Bhaird
The UK Government is to put forward legislation to require public and private company boards to declare their chief executive’s (CEO) salary as a percentage of average pay in the organisation.
Plans to address the increasing pay of British executives has been a long-stated aim of Prime Minister Theresa May. But no equivalent move is in the pipeline here, despite the Irish Congress of Trade Unions (ICTU) work on executive pay and its implications for society.
ICTU has warned
that rising executive pay levels will deepen inequality in Ireland, if the trend is left unchecked.
The UK legislation will require boards to say how they acted in the best interests of all its stakeholders, such as employees and customers, and not just investors.
The exact terms of what information companies are required to report remains unclear. This is against a backdrop of analysts and campaigners warning of the dangers of either over-complicating or over-simplifying the reporting requirements, which could result in deceptive calculations being reported.
Writing in the Financial Times recently, Sarah Gordon said move is motivated by the UK Governments aim “to address public perceptions of unacceptable behaviour by businesses in the wake of the financial crisis.”