New laws to bring greater transparency to the boardroom do not go far enough, critics have said.
Business Secretary Greg Clark is to make all listed companies reveal the pay ratio between bosses and workers and justify the difference – as exclusively revealed by Sky’s City Editor Mark Kleinman last week.
The announcement comes after Prime Minister Theresa May branded fat cat bosses the “unacceptable face of capitalism” at the weekend.
Mr Clark will say later that the reforms will “ensure our largest companies are more transparent and accountable to their employees and shareholders”.
But critics have branded the measures a missed opportunity, with one union slamming the proposals “feeble”.
Image: Business Secretary Greg Clark will outline the measures later
Labour’s shadow business secretary Rebecca Long-Bailey said the proposals were “just more crony capitalism from the Tories, who once again prop up the rigged system for the few at the expense of the many”.
Liberal Democrat leader and former business secretary Sir Vince Cable said the approach was “strong on rhetoric, weak on action”.
He said that the new corporate governance code for large private companies was “voluntary and, therefore, likely to have little effect”.
Image: The PM has branded fat cat bosses the ‘unacceptable face of capitalism’
TUC general secretary Frances O’Grady described the proposal as “feeble”, saying it was “spelling business as usual for boardrooms across Britain”.
She added: “The Prime Minister’s pledge to put workers on company boards has been watered down beyond all recognition.”
Unite’s Len McCluskey said the measures showed the Conservatives have been brought to heel by big business.
Big business was mostly welcoming of the plans, however.
CBI president Paul Drechsler said pay ratios “could prove a useful addition to the debate about executive pay”.
Image: Labour’s Rebecca Long-Bailey said the proposals were ‘just more crony capitalism’
He added: “Providing shareholders with a ‘say on pay’ has been an effective tool and a public register will help to shine a light on the small minority of cases that warrant greater attention.”
Director general of the Institute of Directors Stephen Martin added: “Pay ratios will sharpen the awareness of boards on the issue of remuneration, but they can be a crude measure.
“Companies will have to prepare themselves to explain how pay as a whole in their business operates, and why executives are worth their packages.”
The proposals include giving employees a voice in the boardroom.
Listed companies where a significant number of shareholders are opposed to the executive pay packages would also have their names on a public register.