Firms to publish and justify pay ratio

Companies will soon be forced to publish the pay ratio between executives and average workers and justify the salary gap, under new measures announced by the government.

The Business Secretary Greg Clark will tell Parliament today that directors of all companies with more than 250 employees will be required to disclose and explain the difference in pay, a move welcomed by equal pay campaigners, business and investor groups.

The new regulations also require listed companies to make clear what impact a hike in share prices has on the pay of top bosses.

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There has been growing demand from investors for greater director accountability and transparency over executive remuneration.

The BBC says in recent years shareholders have become “increasingly vocal” over executive pay levels, and have voted against what they see as excessive pay awards, most notably the high sums paid to former WPP boss, Sir Martin Sorrell.

Several big firms have been hit by public outrage over bumper executive pay, “with embarrassing shareholder revolts at firms such as Shell, Astrazeneca and William Hill this year” reports The Independent.

The TUC hailed the new measures, which will come into effect from 2020, as a “first step” but called for even greater rules, specifically guaranteed places on boardroom pay committees for workers, something they say would bring “common sense and fairness to decision-making when boardroom pay packets are approved”.

Earlier this year thousands of businesses were forced to publish their gender pay gap, revealing some 78% of firms paid men more than women.