This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at https://www.theguardian.com/uk-news/2018/jun/10/uk-firms-to-be-forced-to-justify-pay-gap-between-bosses-and-staff
The article has changed 3 times. There is an RSS feed of changes available.
| Version 0 | Version 1 |
|---|---|
| UK firms to be forced to justify pay gap between bosses and staff | UK firms to be forced to justify pay gap between bosses and staff |
| (5 months later) | |
| The country’s biggest public businesses will have to publish the gap between the pay of their chief executive and an average worker, according to rules to be unveiled in parliament on Monday. | The country’s biggest public businesses will have to publish the gap between the pay of their chief executive and an average worker, according to rules to be unveiled in parliament on Monday. |
| Greg Clark, the business secretary, said directors of all companies with more than 250 employees would be required to disclose and explain this difference, known as the “pay ratio”. | Greg Clark, the business secretary, said directors of all companies with more than 250 employees would be required to disclose and explain this difference, known as the “pay ratio”. |
| The long-awaited plans have been criticised by Labour and trade unions for failing to tackle the “entrenched inequality” within Britain’s biggest firms. | The long-awaited plans have been criticised by Labour and trade unions for failing to tackle the “entrenched inequality” within Britain’s biggest firms. |
| Shareholders have become increasingly vocal over executive pay levels, and have voted against what they see as excessive pay awards, most notably the high sums paid to the former WPP boss Sir Martin Sorrell. | Shareholders have become increasingly vocal over executive pay levels, and have voted against what they see as excessive pay awards, most notably the high sums paid to the former WPP boss Sir Martin Sorrell. |
| As well as introducing the publication of pay ratios, the rules will also require listed companies to show what effect an increase in share prices will have on executive pay, in order to inform shareholders when voting on long-term incentive plans. | As well as introducing the publication of pay ratios, the rules will also require listed companies to show what effect an increase in share prices will have on executive pay, in order to inform shareholders when voting on long-term incentive plans. |
| Subject to parliamentary approval, companies would start reporting their pay ratios in 2020. | Subject to parliamentary approval, companies would start reporting their pay ratios in 2020. |
| Clark said: “Most of the UK’s largest companies get their business practices right, but we understand the anger of workers and shareholders when bosses’ pay is out of step with company performance.” | Clark said: “Most of the UK’s largest companies get their business practices right, but we understand the anger of workers and shareholders when bosses’ pay is out of step with company performance.” |
| The move comes after years of shareholder and public outrage over bumper chief executive pay at firms such as Persimmon and BP. | The move comes after years of shareholder and public outrage over bumper chief executive pay at firms such as Persimmon and BP. |
| Shell, Lloyds, AstraZeneca, Playtech, William Hill, GVC, and Inmarsat are among firms who have been subject to shareholder revolts at AGMs this year. | Shell, Lloyds, AstraZeneca, Playtech, William Hill, GVC, and Inmarsat are among firms who have been subject to shareholder revolts at AGMs this year. |
| Last week, housebuilder Persimmon admitted a raft of failures that led to an embarrassing shareholder rebellion over pay for top executives of more than £100m. | Last week, housebuilder Persimmon admitted a raft of failures that led to an embarrassing shareholder rebellion over pay for top executives of more than £100m. |
| Rebecca Long Bailey, the shadow business and industrial secretary, said the Conservatives had missed an opportunity, and pointed out the rule changes had been announced by the government before. | Rebecca Long Bailey, the shadow business and industrial secretary, said the Conservatives had missed an opportunity, and pointed out the rule changes had been announced by the government before. |
| “This won’t end staggering pay disparity or help hard-up workers at the bottom of the chain,” she said. | “This won’t end staggering pay disparity or help hard-up workers at the bottom of the chain,” she said. |
| The TUC general secretary, Frances O’Grady, said publishing and justifying pay ratios was a first step, but more was needed. | The TUC general secretary, Frances O’Grady, said publishing and justifying pay ratios was a first step, but more was needed. |
| “Fat-cat bosses are masters of self-justification and shrugging off public outcry. New rules are needed to make sure they change. | “Fat-cat bosses are masters of self-justification and shrugging off public outcry. New rules are needed to make sure they change. |
| “We need guaranteed places for worker representatives on boardroom pay committees. That would bring a bit of common sense and fairness to decision-making when boardroom pay packets are approved,” she said. | “We need guaranteed places for worker representatives on boardroom pay committees. That would bring a bit of common sense and fairness to decision-making when boardroom pay packets are approved,” she said. |
| The plans have received a cautious welcome from some equal pay campaigners, business and investor groups. | The plans have received a cautious welcome from some equal pay campaigners, business and investor groups. |
| Chris Cummings, the chief executive of the Investment Association, said investors wanted greater director accountability and more transparency over executive remuneration. “Investors will expect boards to articulate why the ratio is right for the company and how directors are fulfilling their duties,” he said. | Chris Cummings, the chief executive of the Investment Association, said investors wanted greater director accountability and more transparency over executive remuneration. “Investors will expect boards to articulate why the ratio is right for the company and how directors are fulfilling their duties,” he said. |
| The director of the High Pay Centre, Luke Hildyard, said pay ratios could prove useful to investors, workers and society more broadly. “We hope that [the move] will initiate a more informed debate about what represents fair, proportionate pay for workers at all levels,” he said. | The director of the High Pay Centre, Luke Hildyard, said pay ratios could prove useful to investors, workers and society more broadly. “We hope that [the move] will initiate a more informed debate about what represents fair, proportionate pay for workers at all levels,” he said. |
| The Confederation of British Industry’s Matthew Fell said high pay was only ever justified by outstanding performance. | The Confederation of British Industry’s Matthew Fell said high pay was only ever justified by outstanding performance. |
| “This legislation can help to develop a better dialogue between boards and employees about the goals and aspirations of their business, and how pay is determined to achieve this shared vision.” | “This legislation can help to develop a better dialogue between boards and employees about the goals and aspirations of their business, and how pay is determined to achieve this shared vision.” |
| National living wage | National living wage |
| Executive pay and bonuses | Executive pay and bonuses |
| Living wage | Living wage |
| Corporate governance | Corporate governance |
| Minimum wage | Minimum wage |
| Pay | Pay |
| Work & careers | |
| news | news |
| Share on Facebook | Share on Facebook |
| Share on Twitter | Share on Twitter |
| Share via Email | Share via Email |
| Share on LinkedIn | Share on LinkedIn |
| Share on Pinterest | Share on Pinterest |
| Share on Google+ | Share on Google+ |
| Share on WhatsApp | Share on WhatsApp |
| Share on Messenger | Share on Messenger |
| Reuse this content | Reuse this content |