U.K. Lawmakers to Investigate Executive Pay, Gender Wage Gap
U.K. Lawmakers to Investigate Executive Pay, Gender Wage Gap
(Bloomberg) -- U.K. lawmakers are investigating executive pay and the gap between what women and men earn at private companies.
Members of Parliament’s Business, Energy and Industrial Strategy Committee will scrutinize how businesses comply with new requirements to report their gender pay gap by April 4, and examine whether the rules properly capture all relevant data, the panel said on Friday in an emailed statement. They’ll also look at progress on simplifying executive compensation and reporting how much company chiefs are remunerated.
“Excessive executive pay and gaps in gender pay are at root an issue of fairness,” Committee Chair Rachel Reeves said in the statement. “Awards for top bosses which vastly outstrip worker pay and which owe little to building genuine long-term value in a company are impossible to justify and damage the social contract between business and the public.”
Prime Minister Theresa May has repeatedly spoken out against excessive wages in the corporate sector, and last year introduced measures to strengthen mandatory reporting around executive compensation. But she was criticized for stepping back from plans for tougher measures, including putting workers on company boards, and in the wake of corporate failures such as Carillion Plc’s bankruptcy earlier this year, lawmakers are keen to show they’re prepared to get tough.
The committee’s probe will include an examination of the role played by remuneration committees, institutional investors and shareholders in containing outsized deals for directors and management. Another area of interest for lawmakers is the use of so-called claw-back provisions to reclaim cash and share bonuses from company chiefs in the event of poor performance.
“Unjustified executive pay awards are the most corrosive influence on public trust in business and businesses must face up to their responsibilities and tackle this problem,” Reeves said. “If businesses don’t step up on executive pay, Government will need to step in.”
To contact the reporter on this story: Alex Morales in London at amorales2@bloomberg.net.
To contact the editors responsible for this story: Flavia Krause-Jackson at fjackson@bloomberg.net, Lucy Meakin, David Goodman
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