Blog : BOARD TALK
|Posted on May 9, 2017 at 9:00 PM|
A new rule forcing Britain's listed businesses to give shareholders a second vote if a significant majority reject the company's pay report is called for today by the Institute of Directors.
Under the IoD’s proposals, if 30% of investors oppose the remuneration report at the annual meeting, the company would have to look again at its pay policy and give shareholders another vote. Despite a series of high profile rebellions in recent months, executive pay is normally waved through at AGMs, with only 3% of FTSE 100 companies suffering a majority vote against executive pay in 2016.
“UK company boards have been put under unprecedented scrutiny in recent months, with the Government and the House of Commons business committee suggesting reforms to executive pay and the governance of private companies. Business has been facing a crisis of public confidence since the financial crisis, and the political impetus to intervene will not disappear, whoever is elected" said Oliver Parry, Head of Corporate Governance.
“UK corporate governance is highly regarded across the world, but there is still a pressing need to rebuild public trust in big business to work in the long-term interests of investors and employees, rather than the short-term interests of managers. Now is the time for sensible reforms which increase transparency and draw more engagement from shareholders” he added.
The IOD sets out its thoughts in the second of a series of business manifesto papers laying out the challenges that will face the victor after the UK's June’s election.
Its paper is part of the organisation’s 'Let’s Push Things Forward' series which sets out a range of policies to strengthen the UK economy after the general election. It also calls on the next government to develop a code of practice for large unlisted companies and to place more emphasis on director training.
The IoD’s paper, which is part of the organisation’s Let’s Push Things Forward series, setting out a range of policies to strengthen the UK economy after the general election, also calls on the next government to develop a code of practice for large unlisted companies and place more emphasis on director training.
Oliver Parry, Head of Corporate Governance at the Institute of Directors, said:
View full Reforming Corporate Governance paper here