Britain’s biggest firms have been given 12 months to reveal their pay ratio between top bosses and workers, the Government announced today.
The changes set out by Business Secretary Greg Clark will force all listed companies to state publicly how much their chief executives are paid compared to their average worker by law.
Companies will also be named and shamed if there has been significant shareholder opposition to executive pay packages.
Mr Clark said the reforms, which he hoped would be in force next summer, will “ensure our largest companies are more transparent and accountable to their employees and shareholders”.
Stefan Stern, director of pressure group the High Pay Centre, said: “This is a big deal. We’ve been told for years that pay ratios would never happen, should never happen and could never happen. Well — they’re happening.”
But union chiefs said the proposals fall far short of Theresa May’s promise to get tough on corporate excess.
The Trade Union Congress (TUC) criticised Mrs May for ditching her 2016 promise to ensure workers sit on company boards.
Under the reforms, firms can either assign a non-executive director to represent employees, create an employee advisory council, nominate a director from the workforce, or explain why they cannot do this.
The TUC general secretary Frances O’Grady said: “It’s a feeble proposal, spelling business as usual for boardrooms across Britain.”
Paul George, of the Financial Reporting Council, acknowledged the worker representation is “different to what has been promised”, but told the BBC: “I think you need to wait before you conclude whether they are feeble.”