The British government announced Tuesday reforms that could see companies that award generous pay packages despite shareholder opposition shamed in a public register, although the package was less ambitious than the original proposals.
The government of Prime Minister Theresa May has been considering reforms since last year following growing public anger over outsize executive pay. One of the key proposals, which must be approved by parliament to become law, would require listed companies to reveal the pay ratio between bosses and workers.
Another would create a public register in which publicly traded companies would be listed if they went forward with executive pay policies despite the opposition of more than one-fifth of shareholders.
It is hoped the negative publicity over being listed in the register would encourage firms to better take into account the views of shareholders. But dropped from the initial proposals floated in November was giving shareholders a veto over executive pay. Votes on the issue during general shareholders meetings are usually non-binding.
One measure that the government is moving forward with is introducing employee representatives on the boards of listed companies.
But the proposals would give firms options including the appointment of an employee representatives or handing a non-executive director the responsibility of voicing the views of employees.
Stephen Martin, the head of one of Britain’s largest employers’ associations, said the Institute of Directors welcomes “the pragmatic approach the government is taking to improve how company boards work.”
However, the head of the Trades Union Congress, Frances O’Grady, accused Prime Minister Theresa May of abandoning her promise to curb corporate excesses.
“It’s a feeble proposal, spelling business as usual for boardrooms across Britain,” she said.