Sunday, 3 December 2017

FTSE chiefs to be forced to take account of average worker pay

Boardroom pay committees at public companies will be forced to show how remuneration is aligned between bosses and their employees under plans to be set out this week by regulators.
Sky News has learnt that the Financial Reporting Council (FRC) will publish a consultation on revisions to the UK corporate governance code which will include giving remuneration committees a formal responsibility to demonstrate the alignment between boardroom and workforce pay.
There will also be a requirement for boards to explain to their workforces how the decisions they have taken on executive packages reflect their overall pay ‎policies.

The plans, to be set out on Tuesday, will reflect growing pressure from ministers for the private sector to show greater restraint at a time when the pay packets of many workers continue to stagnate amid‎ rising inflation.

One insider said the reference to wider workforces was crucial because of the growing use of contractors by some blue-chip businesses.

It is expected that remuneration committees will have to include such part-time workers in their consideration of how pay is aligned with those in the boardroom.

However, it is unclear what sanctions would be available to penalise boards which failed to follow the new requirements.

The Government unveiled a package of corporate governance reform proposals during the summer, including mandatory disclosure of pay ratios between chief executives and a company's average UK worker - with secondary legislation expected next year to enforce this change.

The Investment Association, an industry group, will also oversee a new register set up to highlight companies which see substantial shareholder revolts‎ at their annual meetings.

SKY      News.

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