Publishing executive and staff pay ratios under new governance reform rules would be a “crude” measure of valuing remuneration, but it should force boards to consider pay as a whole, experts have said.

The government has followed up its governance green paper with plans to introduce the reporting of pay ratios, worker representation on boards and more detail required from all large, private companies about how they impact the environment in which they operate.

Business groups have broadly favoured the new mandate. Stephen Martin, director general of the Institute of Directors (IoD), said 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,” Martin added.

However, the TUC criticised what it described as “watered down” proposals, creating a box-ticking exercise for corporates.

“This is a far cry from Theresa May’s promise to crack down on corporate excess,” said TUC general secretary Frances O’Grady. “It’s a feeble proposal, spelling business as usual for boardrooms across Britain.”

Paul Drechsler, CBI president, said that the way in which companies act and behave “determines the way people think about business”.

“Companies take this seriously and we look forward to working closely with the government to ensure the UK maintains its reputation as a global leader in this field and as a primary location for international investment.”

Stefan Stern, director of the High Pay Centre think-tank, said boards and investors should have “more thoughtful” conversation on executive pay, and more disclosure would help in that drive.

“This is a step in the right direction, providing greater transparency and focusing the public’s attention on those companies who ignore the concerns of their shareholders.”