The PLSA has responded to the Business Energy and Industrial Strategy (BEIS) Select Committee consultation on corporate governance. The Association has a keen interest in ensuring the highest standards of corporate governance in the UK, and welcomes the Select Committee’s interest.
The Committee outlined three areas of particular interest. Our position on these can be summarised as follows:
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Directors’ duties – We are supportive of the current iteration of directors' duties outlined in the 2006 Companies Act, requiring directors to have regard for all stakeholders, including employees, customers and wider society, but believe that these are poorly understood, enforced and reported against. More needs to be done to raise awareness of directors’ long-term responsibilities. Regulators should monitor reporting by companies of how these responsibilities have been fulfilled.
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Executive remuneration – Our members are concerned by rising levels of executive pay in comparison to the pay awarded to the wider workforce. We believe the justification for this increasing discrepancy is weak and we support measures to empower engaged shareholders and to require disclosure of intra-company pay ratios.
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Boardroom diversity – We believe that more diversity is needed in boardrooms, in terms of gender, professional and social background and ethnicity. In a global economy, a broad range of experience and perspectives is helpful to understanding diverse markets and guarding against ‘group think’.
More generally the Association would like companies’ annual reports to include more information on how working practices, stakeholder relationships and corporate culture relate to the wider business strategy. [...]
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