The Government’s plans to crack down on executive pay, outlined in today’s corporate governance reforms, has had a mixed reaction from the industry.
Here we have comments from the Pensions and Lifetime Savings Association (PLSA) which highlights that 84% of pension funds are concerned about the pay gap in listed companies with 86% believing that executive pay in listed companies is too high.
Luke Hildyard, stewardship and corporate governance policy lead, Pensions and Lifetime Savings Association, told IFA Magazine:
“Today’s announcement that companies will need to disclose and explain the pay gap between their chief executive and ordinary workers is to be welcomed. For the average chief executive to receive 128 times the average pay of their staff is hard to justify and appears disproportionate in almost any circumstances.
“We are hopeful that today’s announcement is a concrete step forward which will see a more measured and transparent approach to executive pay. However, we would like to have seen stronger requirements place on companies with regards to their CEO pay policies. Requiring a supermajority (75%) rather than a simple majority (50%) means that it would be harder for companies to force through pay proposals despite serious reservations from their most engaged shareholders.”
“Workplace pension schemes represent the interests of almost 20 million active members across the UK and invest trillions of pounds into the economy – they are some of the most long-term and engaged shareholders that companies have. It is clear that they are extremely uncomfortable with the executive pay culture that has taken hold across corporate Britain with the vast majority voicing concerns over the pay gap and executive pay in listed companies.”
