HPC responds to Select Committee Inquiry on Executive Pay
Our response highlights the limited progress of reforms recommended by the Business, Energy and Industrial Strategy Select Committee
We have responded to the Business, Energy and Industrial Strategy Select Committee's Inquiry on Executive Pay. Our response highlights the lack of progress made in relation to recommendations made in the Committee's 2017 report.
For example, there are still very few companies who align their bonuses with broader corporate responsibilities (relating to their social or environmental impact, for example), as opposed to financial or operational metrics. Vast Long-Term Incentive Payments (LTIPs) are still the prevailing method for paying executives, despite the growing evidence that performance-related executive pay is not particularly effective and that much smaller 'restricted share' awards would be a better form of reward.
The response also argues that remuneration committees and institutional investors are failing to hold companies to account over their pay practices, and recommends greater say for workers in the pay-setting process.
Since 1 January 2020 the average FTSE 100 CEO has earned:
Income inequality in the UK
Wealth inequality in the UK
- COVID19 and corporate resilience
The pandemic is highlighting the deep flaws in the UK’s corporate governance system. Will this prompt listed companies to rethink their priorities? - A blog by Rachel Kay, a researcher at the High Pay Centre
- Executive Compensation: Covid-19—A “New Normal” Or Back To The “Old Normal” by 2022?
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- Re-thinking reward: interim High Pay Centre analysis of new pay ratio reports
Our analysis of the first 'pay ratio' reports finds some limitations to the disclosures, but also identifies the potential to raise pay for low earners through redistribution from those at the top