Prime minister Theresa May’s policy pledge to give shareholders the annual power of veto over executive pay could fail to work, according to a report from Reuters.
The news service quotes investment manager Gina Miller of SCM Direct as saying: “Fund managers will be too afraid that the transparency torch they shine on boardroom pay would then be shone on their excessive pay packages.”
The comments come in the wake of Theresa May’s key speech — just before her rise to party leader and appointment to 10 Downing Street — in which she also proposed forcing companies to publish figures showing the difference between average workers’ pay and the chief executive. She also proposes measures bringing employee representatives on to boards.
Though the policies were outlined in June after the Brexit vote, Number 10 has yet to publish any draft policies.
At the beginning of August the High Pay Centre published figures showing that executives in the UK’s largest companies received a 10% pay rise last year, earning an average of £5.5m.
At the time the centre’s director, Stefan Stern, said: “The High Pay Centre was delighted by Theresa May’s recent intervention on this issue. There now seems to be political will and momentum behind attempts to reform top pay.
“In particular we support two of her main proposals: that companies should be obliged to publish the ratio between the pay of the CEO and the average worker in the business, and that the voice of the ordinary employee must be heard in discussions over executive pay.
“Businesses could save themselves a lot of grief, and do something to restore their reputations, if they listened to workers first before awarding these bumper pay packages.
“The question the outside world keeps asking is ‘How much?!’. How much better to try and answer that question internally first with concerned yet supportive employees?”