SEVERE WX : Wind Advisory - High Wind Watch - Winter Weather Advisory View Alerts
STREAMING NOW: Watch Now

UK companies will have to explain CEO pay

Britain's largest companies will have to explain the gap between what they pay their CEOs and their employees under d...

Posted: Jun 11, 2018 3:52 PM
Updated: Jun 11, 2018 3:52 PM

Britain's largest companies will have to explain the gap between what they pay their CEOs and their employees under draft legislation presented to lawmakers on Monday.

The rules would apply to UK companies with a stock market listing and more than 250 employees. They're part of a package of reforms aimed at holding big businesses to account for the salaries they pay top executives. Companies would have to start publishing the ratio of CEO to average pay, and the justification for it, from 2020.

The law is similar to one which came into effect this year in the United States. American companies have since published data showing that top executives are being paid hundreds -- or even thousands - of times that of the median worker at their companies.

Related: New report highlights massive pay gap between CEOs and typical workers

The UK legislation also follows gender pay gap disclosure requirements introduced last year. The first wave of disclosures revealed that some 78% of firms paid men on average more than women.

Under the bill presented Monday, all UK-listed companies will also be required to show how future share price rises will affect executive pay to help inform investors when they vote on long-term incentive plans.

Related: Gender pay gap - these women are angry

The pay ratio proposal was laid out by Prime Minister Theresa May in 2016, when she called for "responsible capitalism" and curbs to excessive executive remuneration.

The measure has been welcomed by equal pay campaigners as well as business and investor groups. Several companies have faced public outrage over excessive executive pay.

On average, chief executives of companies in the FTSE 100 index make 129 times the pay of their employees, according to report by the High Pay Centre in August 2017.

"Most of the UK's largest companies get their business practices right but we understand the anger of workers and shareholders when boss' pay is out of step with company performance," Business Secretary Greg Clark said in a statement.

Last month, AstraZeneca faced an embarrassing rebuke from investors over executive pay after the pharmaceutical company revealed a 46% drop in operating profits for the first quarter.

Royal Dutch Shell also suffered a bruising shareholder revolt when more than a quarter of investors voted against a multimillion euro payout for CEO Ben van Beurden.

"High pay is only ever justified by outstanding performance," said Matthew Fell, chief policy director of the CBI, a business lobby group. "The legislation can help to develop a better dialogue between boards and employees about the goals and aspirations of their business," he added.

But the plans have been criticized by the opposition Labour Party and labor unions for not going far enough.

Frances O'Grady, general secretary of the Trades Union Congress, described the measure as a "first step" but said the government should go further by forcing companies to appoint workers' representatives to their boards.

This would bring "common sense and fairness to decision making when boardroom pay packets are approved," she said.

Oregon Coronavirus Cases

Data is updated nightly.

Cases: 348766

Reported Deaths: 4161
CountyCasesDeaths
Multnomah54797689
Washington37988313
Marion36055444
Clackamas29094304
Lane26966298
Jackson22632300
Deschutes19577123
Umatilla14241144
Linn12380120
Douglas11795240
Josephine9233195
Yamhill8517110
Klamath7709110
Polk715380
Malheur551574
Benton529130
Coos489691
Columbia371343
Jefferson361450
Union313146
Lincoln310638
Wasco281540
Crook274745
Clatsop239529
Baker198028
Tillamook193328
Hood River188337
Morrow181623
Curry178122
Harney108424
Grant97612
Lake89011
Wallowa67012
Gilliam1484
Sherman1463
Wheeler991
Unassigned00

California Coronavirus Cases

Data is updated nightly.

Cases: 4812309

Reported Deaths: 70616
CountyCasesDeaths
Los Angeles147679126410
Riverside3693444990
San Diego3646344163
San Bernardino3563155566
Orange3227415518
Sacramento1576212279
Santa Clara1445181890
Kern1441461605
Fresno1441232051
Alameda1198871374
San Joaquin1018071708
Ventura1005241164
Contra Costa99234982
Stanislaus851571315
Tulare78945951
San Francisco54031645
San Mateo53828622
Monterey50696582
Solano45761334
Santa Barbara44836521
Merced41781577
Sonoma40711402
Placer38902415
Imperial35642764
Kings32369314
San Luis Obispo29653329
Madera23518281
Butte23364260
Shasta23360334
Santa Cruz20861218
Yolo20147247
Marin17581243
El Dorado16960149
Sutter13775169
Napa12808100
Yuba994282
Tehama9298104
Humboldt9102108
Nevada903990
Mendocino752786
Lassen746346
San Benito737372
Tuolumne673993
Lake6506104
Amador537264
Siskiyou442742
Glenn430330
Calaveras381780
Del Norte356141
Colusa301718
Inyo196739
Mono16445
Plumas15756
Mariposa127315
Trinity86011
Modoc6698
Unassigned1860
Sierra1760
Alpine1020
Out of CA00
Medford
Clear
45° wxIcon
Hi: 55° Lo: 39°
Feels Like: 45°
Brookings
Partly Cloudy
46° wxIcon
Hi: 58° Lo: 41°
Feels Like: 46°
Crater Lake
Partly Cloudy
45° wxIcon
Hi: 36° Lo: 25°
Feels Like: 45°
Grants Pass
Partly Cloudy
45° wxIcon
Hi: 59° Lo: 42°
Feels Like: 45°
Klamath Falls
Partly Cloudy
29° wxIcon
Hi: 50° Lo: 35°
Feels Like: 29°
Winds pick up Tuesday
KDRV Radar
KDRV Fire Danger
KDRV Weather Cam

Community Events