While the publication of pay ratios (Report, 11 June) will provide workers and shareholders with vital information to hold boards to account for unacceptable pay disparities, transparency alone is not enough.
In the past 20 years, CEO pay has risen from 47 to 120 times as much as their average employee. Fixing these massive pay inequalities will require fundamental structural reforms, not more reporting.
The proposed laws also require directors of all large companies to set out how they are acting in the interests of employees and shareholders. These requirements are the government’s response to a series of corporate scandals, but the measures look truly inadequate in the wake of Carillion’s collapse.
If the government wants to fix the underlying problems, it should set out more ambitious reforms and a longer-term vision for the UK corporate governance framework. The UK’s “enlightened” shareholder model has clearly failed because the majority of shareholders are not enlightened, not engaged and only operate on a short-term basis.
Company law should be amended to require directors to promote the long-term success of the company as their primary duty, with directors required to take account of the interests of workers, suppliers and shareholders.
Stakeholder voice should also be given real weight on company boards through two-way engagement and workers being included in board-level decision making. It would be right, therefore, for the government to reinstate proposals to require companies to put elected workers on their board.
Marilyn Croser Director, Corporate Responsibility Coalition
Janet Williamson Senior policy officer, TUC
Anne Lindsay Lead analyst – private sector, Cafod
Bethan Livesey Head of policy, ShareAction
Dr Wanda Wyporska Executive director, Equality Trust
Luke Hildyard Director, High Pay Centre
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