LONDON, April 5 British businesses should
overhaul executive pay and scrap long-term incentive plans to
rebuild public trust in corporate culture following recent
scandals, a committee of lawmakers said on Wednesday.
Companies should publish pay ratios annually and workers
should be represented on remuneration committees, parliament's
Business, Energy and Industrial Strategy (BEIS) Committee said
in a report.
Executive pay is a hot political topic in Britain after
Prime Minister Theresa May campaigned to help those who voted
for Brexit in protest at "out of touch" elites.
Corporate scandals - exemplified by the recent collapse of
store chain BHS, sold to a serial bankrupt with no retail
experience - have fuelled mistrust of company bosses, during a
period of mediocre wage growth for most Britons.
"Successful, productive and profitable companies cannot be
disconnected from society," said Iain Wright, chair of the BEIS
"Executive pay has been ratcheted up so high that it is
impossible to see a credible link between remuneration and
Shareholder revolts over pay have been commonplace this
On Monday, Sky News reported that BP Plc agreed to
cut about 5 million pounds ($6.2 million) from Chief Executive
Bob Dudley's maximum pay for the next three years in a bid to
ease shareholder unrest, citing people briefed on the matter.
And last week Reckitt Benckiser said boss Rakesh
Kapoor, one of Britain's highest-earning CEOs, saw his 2016 pay
package fall by more than a third following a safety scandal in
South Korea that dented the consumer goods maker's performance.
The committee singled out long-term incentive plans for
company bosses as lacking in transparency.
"Pay must be reformed and simplified to incentivise
decision-making for the long term success of the business and to
pursue wider company objectives than share value," Wright said.
Responding to the report, the Confederation of British
Industry agreed long-term incentive plans could be too complex,
but said banning them outright would limit flexibility for
companies to reward executives.
(Reporting by Andy Bruce; Editing by Hugh Lawson)