World's first public register to support investors objecting to executive pay deals
The Government today announced a world-first public register of listed companies facing significant shareholder opposition over executive pay as part of corporate governance reforms.
The new register, to be launched by the end of the year, will name firms where a fifth of investors have objected to proposed executive annual pay packages. Companies named on the register will detail how they intend to address investors’ concerns.
The move towards greater transparency around boardroom deals follows high profile revolts by shareholders opposing executive pay deals.
Business Secretary Greg Clark has asked the Investment Association, a trade body that represents UK investment managers, to set up the first-ever public register of its kind.
Business Secretary Greg Clark said:
“Most companies are proactive and thoughtful when it comes to responsible business practices.
“But there are a small minority of firms that threaten the reputation of business with their behaviour, including ignoring shareholders’ concerns about executive pay packages.
“This first-ever register will help shareholders to publicly hold these companies to account.”
Chris Cummings, Chief Executive of the Investment Association, said:
“The creation of the public register on shareholder voting is an important step in increasing accountability and transparency of those listed companies that see significant shareholder rebellions during the AGM season.
“Our members, who manage the pensions of 75% of UK households and own over one third of the FTSE, believe that not all company boards that receive big shareholder dissent are currently doing enough to address investor concerns. This public register will help sharpen the focus on the those who must do more, enabling our members to hold the country's biggest businesses to account and leading to better-run companies.
“We look forward to working with Government to deliver the public register and aim to launch it later this Autumn."
Stefan Stern, director of the High Pay Centre think-tank, said:
"We want investors and boards to have a more constructive and more thoughtful conversation on executive pay, and this sort of public disclosure should help.
“This is a step in the right direction, providing greater transparency and focusing the public’s attention on those companies who ignore the concerns of their shareholders.”
Business Secretary Greg Clark is expected to unveil the new measure on Tuesday (29 August) alongside plans for a number of new laws to improve the way the UK’s largest companies are run.
The reforms will seek to ensure employees’ voices are heard in the boardroom of listed companies by either assigning a non-executive director to represent employees, nominate a director from the workforce or create an employee advisory council.
The package will also seek to address concerns over the levels of executive pay and the way large private companies are run.
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Notes to editors
The register will apply to companies in the FTSE All-Share Index. It will not apply to companies on the Alternative Investment Market (AIM) or the FTSE Fledgling Index.
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