Daily CSR
Daily CSR

Daily CSR

Daily news about corporate social responsibility, ethics and sustainability


A Green Paper In Britain Parliament Demands Employee-Executive Pay-Gap To Be Disclosed



01/03/2017

The proposals at the Parliament of Britain demands a number of changes in the law in regards to executive-employee relations in the corporate world, wherein the shareholders could have an important role to play.


Dailycsr.com – 02 January 2017 – According to Brian Collet’s report, “biggest companies” of Britain could be compelled to declare the pay-gap that exists between the seniors and the “average” employee payment.
 
The above mentioned proposal forms part of the list of changes that has been suggested in one of “government green paper” following the year full of commotion regarding the “size of financial rewards handed to UK bosses”, which also takes into account the companies that are making loss.
 
However, there is a “second proposal” in the green paper which refers to a “discussion document”, the latter being an “early part” of the “parliamentary legislation process”; whereby the same could ask the shareholders as well as the “other stakeholders” to provide “wider consultation on remuneration packages”.
 
Moreover, there is yet a “third proposal” which could possibly be the “most controversial” one, whereby shareholders would have to cast an annual vote on “pay legally binding”, while the suggestion of employees being appointed in the company board has not been pursued further, as the Prime Minister, Theresa May, herself “ruled out that measure” while addressing the “Confederation of British Industry”.
 
Nevertheless, there are considerations among the government of providing “an advisory role” to employee representatives instead of giving them “power on remuneration deals”.
 
On the other hand, the Trade Union Congress presented a study which reflected an extensive concern regarding the “executive pay” as mostly the executive figures of FTSE 100 companies get “123 times” more salaries in comparison to their respective “average full-time salary”. Additionally, the report informed that:
“…the median pay of leading FTSE 100 company directors rose in the 2010-15 period by 47 per cent to £3.4m ($4.2m, €4m)”. 
 
Furthermore, Brian Collet writes that:
“Immediately after the green paper was published Andy Haldane, the Bank of England’s chief economist, rejected the proposals for legally binding votes on pay and the publication of remuneration ratios”.
 
More or less, at the same time, another report jointly presented by the BoE and the “Big Innovation Centre” warned that the binding votes could cost the largest companies of Britain to loose “valuable talent”. The solution, as per the report, is for the shareholders to have “more say on executive pay” as oppose to the “powers” to make decision. However, a “binding regime” was also recommended in case “a company failed to obtain satisfactory advisory support”.
 
While, a statement from the government said:
“The UK has led the world in corporate governance, but our strong reputation can only be maintained if government and business regularly review and upgrade our governance.
“Good governance helps companies take better decisions, for their own long-term benefit and the economy overall, ensuring public trust in British business and making sure the UK is the best place in the world to do business.”
 
A white paper usually follows a green paper proposal, as a “policy statement”, which then undergoes numerous “parliamentary stages” before it is passed as a law, while the parliamentary journey from the green to white paper could extend over a minimum period of twelve months.
 
 
 
 
References:
http://www.ethicalperformance.com/