Welcome common sense on pay ratio

By 18.05.17BlogAugust 28th, 2020No Comments

High Pay Centre statement on the Conservative party manifesto

On page 18 of the Conservative party manifesto 2017 you find the following section:

Fair corporate pay

“We believe people should be rewarded for their talents and efforts but the public is rightly affronted by the remuneration of some corporate leaders. Senior corporate pay has risen far faster than corporate performance, and the gap between those paid most and those paid least [[sic – should be average pay, not “least”]] has grown from 47:1 in 1998 to 128:1 in 2015.

“The next Conservative government will legislate to make executive pay packages subject to strict annual votes by shareholders and listed companies will have to publish the ratio of executive pay to broader UK workforce pay. Companies will have to explain their pay policies, particularly complex incentive schemes, better. We will commission an examination of the use of share buybacks, with a view to ensuring these cannot be used artificially to hit performance targets and inflate executive pay.”

The High Pay Centre welcomes this commitment to make the publication of pay ratios compulsory. This will be a useful step in restraining the excesses rightly criticised above.

This is just a starting point, however. We look forward to working with our partners at CIPD to help make pay ratios a positive and constructive intervention in employers’ approach to pay at all levels in the organisation.

An investigation into the use of share buybacks is timely and necessary.

For further reading on pay ratios see our November 2015 publication:

Pay Ratios – Just Do It

Stefan Stern