24 January 2017

Financial Times: May told to toughen line on executive excess

Organisations representing company directors, company secretaries, investors and trade unions have come together to outline their arguments in a letter, sent to Theresa May on Tuesday, that urges the government to go beyond incremental reforms suggested late last year.

The signatories also argue that the government should create a regulatory body to police corporate governance more effectively, and ensure that businesses are run for the benefit of staff and society as well as shareholders. The letter was signed by the heads of the ICSA, which represents company secretaries, the Institute of Directors, the investor-led International Corporate Governance Network and the Trades Union Congress. It was co-ordinated by David Pitt-Watson, a former executive at investment group Hermes, now an executive fellow at London Business School. When the government published its green paper on corporate governance reform in November, some were critical that more radical ideas voiced by Mrs May last summer had been watered down. The notion of employee representatives on boards had been dropped and there had been a move away from obligatory annual votes on pay.

“The government on behalf of the people of Britain needs to ensure this debate is never shelved,” the letter says. “Good corporate governance is a necessary condition for any economy which both works, and is seen to work for everyone.” In particular, the prime minister should demand that “companies, their remuneration committees, advisers and shareholders, recognise the problem [of executive pay], and resolve a better, and perhaps a simpler regime” for it.

Full article on Financial Times (subscription required)

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