The complexities of executive pay packets could move up the agenda following the EU referendum vote, as investors capitalise on Theresa May’s calls for companies to be more responsible citizens, a leading remuneration firm has said.
The new Prime Minister said in a speech this week that she wanted to see binding votes on corporate pay, not just on future pay targets, and full disclosure of how much more a chief executive earns than his employees.
“I want to simplify the way bonuses are paid so that the bosses’ incentives are better aligned with the long-term interests of the company and its shareholders,” she said.
These changes, if enforced, would build on growing calls to fix the complex rules and targets of long-term bonuses described as “not fit for purpose” by the Investment Association. Several firms including BP and WPP have endured bruising encounters with shareholders unhappy with long-term share awards this year.
“The argument is that executive pay is too high and too complicated, which results in little alignment between how much directors earn and the long-term performance of the company. Theresa May’s comments earlier this week have only added to the debate,” said Rob Burdett, partner at FIT Remuneration Consultants.
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