British MPs launch probe into exec pay

LONDON • British lawmakers launched an inquiry into executive pay and corporate governance yesterday, keeping up pressure on big businesses criticised for boosting top-level salaries while not fairly rewarding workers.

Prime Minister Theresa May denounced the yawning pay gap as irrational and unhealthy, vowing to better align incentives with the long-term interests of firms.

In a speech prior to taking office, she also suggested making shareholder votes on corporate pay binding and backed publishing the ratio between a boss' pay and that of the average worker.

Although any findings from the Parliament's Business Innovation and Skills Committee are not binding, they could add to public pressure for stricter rules on top firms.

Chairman Iain Wright said: "We need to look again at the laws that govern business and how they are enforced. While there has been some recent shareholder actions against these ever-larger pay packages, can we have any confidence that the current framework for controlling pay is working?"

Britain has seen a resurgence in investor activism in the last year, with several FTSE 100 bosses criticised at annual general meetings for taking larger pay deals at a time of weak growth.

A survey released last month said that last year, the average pay of Britain's FTSE 100 bosses rose by over 10 per cent to £5.5 million (S$9.9 million) - 140 times more than employees'.

The committee will investigate if executive pay should consider long-term firm performance and worker representation on boards. Lawmakers will also study ways to boost the number of women in executive positions, with a recent inquiry suggesting that most of Britain's biggest firms are failing to reach a target of 25 per cent of executives being women.

REUTERS

A version of this article appeared in the print edition of The Straits Times on September 17, 2016, with the headline 'British MPs launch probe into exec pay'. Print Edition | Subscribe