Government must be bolder on top pay and corporate governance

Mathew Lawrence, IPPR research fellow, responding to today's government announcement on corporate governance reform, said:

"The aim of corporate governance reform should be to tackle the deep-rooted problems in the UK's economic model: low levels of business investment and high levels of pay inequality.

"While welcome, these announcements don't go far enough to address these fundamental challenges.

"The evidence shows there is little correlation between executive pay deals and business performance.

"Consulting workers on executive pay is a good first step but lacks bite; nor is it likely that transparency on pay ratios will be enough to rein in excessive remuneration packages.

"The government needs to be bolder. Rewriting the rules of the firm - expanding who has voice and power within the workplace, and making firms focus on long-term investment - is critical to improving the economy as a whole.

"This is why IPPR's Commission on Economic Justice will be examining a deeper form of corporate governance reform to help ensure the economy works for everyone, not just those at the top."

Contact:

Kieren Walters 07921 403651 k.walters@ippr.org

Editor's Notes:

1. The evidence shows there is little correlation between executive pay deals and business performance. In fact only two of the top 10 best paid FTSE 100 CEOs in 2015 made the top 30 in "value for money" rankings of executive pay. [https://www.ft.com/content/13fde3b0-871d-11e6-bbbe-2a4dcea95797]

2. The IPPR Commission on Economic Justice aims to rewrite rules for the post-Brexit economy. It is a major two-year programme will examine the challenges facing the economy and make practical recommendations for its reform. The Commissioners include the Archbishop of Canterbury, TUC General Secretary, Chairman of John Lewis, CEO of Siemens UK, and many other leading figures.

3. IPPR aims to influence policy in the present and reinvent progressive politics in the future, and is dedicated to the better country that Britain can be through progressive policy and politics. With nearly 60 staff across four offices throughout the UK, IPPR is Britain’s only national think tank with a truly national presence. Our independent research is wide ranging, it covers the economy, work, skills, transport, democracy, the environment, education, energy, migration and healthcare among many other areas. ippr.org