Business

Powers to tackle excessive pay have flopped, research suggests

Shadow business secretary Rebecca Long Bailey said the findings underline that Tory policies have failed to tackle excessive executive pay in some businesses
Shadow business secretary Rebecca Long Bailey said the findings underline that Tory policies have failed to tackle excessive executive pay in some businesses Shadow business secretary Rebecca Long Bailey said the findings underline that Tory policies have failed to tackle excessive executive pay in some businesses

MEASURES giving shareholders the power to tackle excessive executive pay have "flopped", new research suggests.

The High Pay Centre think tank said that between 2014 and 2018 every single FTSE 100 company pay policy put to an annual meeting was approved by shareholders.

The study found that of more than 700 pay-related resolutions voted on at AGMs over the same period, the average level of shareholder dissent was just 8.8 per cent.

Only 11 per cent of pay-related resolutions attracted significant dissent levels of more than 20 per cent, and just six advisory votes on the pay packages awarded in previous years were defeated over the period, said the report.

The think tank said its findings come despite median levels of chief executive pay reaching £3.9 million in 2017, an annual increase of 11 per cent, and about 137 times the annual salary of a typical UK worker.

Polling has repeatedly shown public support for more meaningful measures to address very high pay and economic inequality, including caps on top pay and worker representation on company boards, said the High Pay Centre.

Director Luke Hildyard said: "People don't want to live in a society with such huge divides between those at the top and everybody else.

"There are big problems with the business culture in the UK and putting shareholders in charge of the system has failed.

"We now need to be much bolder about giving workers representation on company boards and ensuring that when companies do well, all staff get a share of the profits."

The 2013 Enterprise and Regulatory Reform Act gave shareholders a binding vote on a company's executive pay policy at least once every three years at the AGM.

Shadow business secretary Rebecca Long Bailey said: "Today's findings sadly tell us what we already know, that Tory policies have failed to tackle excessive executive pay in some businesses which is contributing to rampant inequality.

"Many businesses do work hard to ensure that success is shared fairly across the workforce, however it is clear that more must be done at a Government level to change the corporate culture existing in some firms, a culture which many workers would find immoral."