A committee of MPs have made a series of recommendations in a bid to help restore trust over payments to executive staff at many of the UK’s biggest companies.
The report by the Business, Energy and Industrial Strategy Committee of MPs found that there was a major disparity in the payment awards at top firms after a number of high profile pay rows involving the likes of Unilever and BT.
The most high profile case involved Jeff Fairburn being forced to resign from housebuilder Persimmon following a backlash over the £85 million payment he received.
The Business, Energy and Industrial Strategy Committee believe that a cap should be imposed on bosses pay in a bid to tackle ‘corporate greed’. They say it’s time to break down what they claim to be a heavy reliance on overgenerous, incentive-based executive pay that is deliberately made complex to shake off shareholder opposition.
The report says failing remuneration committees should face action from the regulator formed to replace the Financial Reporting Council.
It states that the new Audit, Reporting and Governance Authority needs to be more proactive in tackling excessive executive pay.
MPs recommend that pay committees should be required to set caps, publish and explain the pay for executives during any financial year and that more should be done to tackle disparity between executive pay growth and workers through introducing schemes such as profit-sharing and boosting pensions.
Several FTSE 100 firms, including HSBC and Centrica, have taken steps in recent weeks to cut payments to bosses following anger over discrepancies between those at the top and staff.
Committee chair Rachel Reeves said: “The roll call of dishonourable executive pay decisions at firms including Persimmon, Unilever, Royal Mail, BT, Melrose and Foxtons tells the all-too-familiar tale of corporate greed which is so damaging to the reputation of business in our country.
“When the company does well, it is workers and not just the chief executive who should share the profits.”
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