North West companies will need to reveal pay gaps between CEOs and workers

01 Sep 2017

Business

Earlier this year a study conducted by think-tank High Pay Centre, revealed that CEOs earned on average 129 times more than their lowest paid employees.

In the interests of transparency, the government has announced its plans for corporate governance reforms to enhance the public’s trust in businesses. The Prime Minister has previously stated that the behaviour of a small number of companies had damaged the public’s confidence in big business.

Stefan Stern, director of the High Pay Centre think-tank, said:”We want investors and boards to ‎have a more constructive and more thoughtful conversation on executive pay, and this sort of public disclosure should help.

“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.”

Under the new reforms around 900 listed companies will be required to publish, and justify, the pay ratio between CEOs and their average UK worker. If your company is of a significant size, it will also have to publicity explain how directors take employees’ interests into account.

The new reforms will include a public register of listed companies where a fifth of investors have objected to executive annual pay packages. The reforms are also designed to ensure that employee voices are heard in the boardroom.

Greg Clark, Secretary of State for Business, said: “One of Britain’s biggest assets in competing in the global economy is our deserved reputation for being a dependable and confident place in which to do business.

“Our legal system, our framework of company law and our standards of corporate governance have long been admired around the world. We have maintained such a reputation by keeping our corporate governance framework under review. Today’s reforms will build on our strong reputation and ensure our largest companies are more transparent and accountable to their employees and shareholders.”

The government intends to bring the new legislative reforms into effect by June 2018.

St Helens Chamber Members have access to round the clock HR advice, downloadable documents and insurance through Chamber Protect. So if you have any concerns or queries about the new reforms you can contact the advice line on 01455 852 037.