The government has set out proposals to reform the way big businesses are run in an effort to clean up corporate Britain after a series of scandals and a row over executive pay deals.
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Greg Clark, the business secretary, published a green paper that he said would ask whether shareholders should be given a binding vote on executive pay, how employees could be heard in the boardroom and whether private companies should be subjected to some of the rules faced by public companies.
Clark said: “This government is unequivocally and unashamedly pro-business but we hold business to a high standard in doing so.” He noted that “executive pay has grown much faster over the last two decades than pay generally and at times is not in line with corporate performance”.
The government has announced the review against the backdrop of the average pay of a chief executive of a FTSE 100 company rising to £5.5m in 2015 from £1m in 1998, outpacing wage growth outside the boardroom. The Institute for Fiscal Studies thinktank warned last week that workers in Britain face the longest squeeze on their earnings for 70 years.
Theresa May had pledged to reform corporate Britain during her campaign to become Conservative party leader after the Brexit vote. She insisted last week that she will not force companies to put workers on boards – although Clark insisted that workers’ views will be represented through a non-executive director on the board.
It is the latest attempt by politicians to react to public outcry over pay. In 2012, the then business secretary, Vince Cable made changes to the way directors’ pay was announced and introduced a binding vote on pay every three years.
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