Today Labour welcomes an independent report into curbing
excessive executive pay and tackling pay inequality.
The report, by a group of experts led by Professor Prem Sikka,
includes recommendations that:
- Executive remuneration contracts in large companies be made
publicly available.
- Executive remuneration be in cash, as rewards in share
options, shares and perks invite abuses.
- Pay differentials between executives and employees analysed
by gender and ethnicity be published.
- Company law be amended to give stakeholders the right to
propose a cap on executive pay and bonus package.
- The remuneration of each executive at large companies be
subject to annual binding vote by a range of stakeholders.
Labour will look closely at all of the report’s recommendations
as we build upon our existing policy of a 20:1 pay ratio for the
public sector and companies bidding for public sector contracts.
, Shadow Business
Secretary, commenting on the report, said:
“Whilst many of our businesses work hard to ensure that rewards
and prosperity are fairly shared across their workforce, there
continues to exist a pernicious corporate culture in some firms
that many across Britain would view as immoral.
“It cannot be right that in just three working days, the UK’s top
bosses will have made more money than the typical full-time
worker will earn in the entire year.
“Labour will look closely at the recommendations of this report
as we seek to build on our existing policy of tackling pay
inequality.”
, Shadow Chancellor of the
Exchequer, commenting, said:
“Coming on the heels of the International Labour Organisation’s
report on Monday, the scale of bonuses and the opaque way they
are paid should be a source of shame to those running our
economy.
“The Government have shown no interest in tackling the causes of
inequality in our society and we are grateful to Professor Sikka
and his team for shining a light on the problem.”
Ends
Notes to editors:
- · Committed to a
20:1 pay ratio between lowest and highest paid employees in the
public sector. We will also move towards a 20:1 pay ratio between
lowest and highest paid employees in companies bidding for public
sector contracts. A 20:1 ratio means someone earning the living
wage, just over £16,000 a year, would permit an executive to be
earning nearly £350,000.
- · Committed to
introduce an Excessive Pay Levy on companies employing people on
over £330,000.
- · Committed to
requiring all private and public employers to obtain government
certification of their gender equality practises or face fines
and further auditing.
- · Committed to
introducing equal pay audits and considering initiatives to
tackle ethnic bias, including exploring the practicalities in
rolling out name-blind recruitment practices if necessary.
- According to the House of Commons Business, Energy and
Industrial Strategy Committee 2017 report on Corporate
Governance, in the 1980s a typical FTSE 100 top chief executive
was paid approximately 20 times as much as the average British
worker, but by 2002 this had risen to 70 times and to 150 times
in 2014.
- In 2016 said that she would introduce
annual “binding” shareholder votes on corporate pay: “I
want to make to corporate governance, I want to make
shareholder votes on corporate pay not just advisory but
binding. I want to see more transparency." (, 11 July
2016, http://www.ukpol.co.uk/2016/07/11/theresa-may-2016-speech-to-launch-leadership-campaign/).
- But the corporate governance Green Paper launched by
later that year rowed back on
this commitment, with Clark saying that this was only one
proposal that the Government was consulting on, and that votes
might not be annual: “That is one proposal that we are
consulting on. May be annual may be dependent on the
contract…its right shareholders should be active in this”
(, Today, 29
November http://www.bbc.co.uk/programmes/b006qj9z).
- Following on from the Government’s response to the green
paper, they renounced their plans to tackle executive pay:
- Listed companies will legally be required to annually
publish and justify pay difference between chief executives and
their staff.
- Directors of all large companies will also have to set out
how they are acting in the interests of employees and
shareholders
https://www.gov.uk/government/news/uks-biggest-firms-will-have-to-justify-pay-gap-between-bosses-and-their-workersb (Greg
Clark June 2018).
- Their proposals fail hard-up workers at the bottom of the
corporate chain and allows the big bosses of some companies to
continue to receive huge sums even if company performance is
poor.
