The Department for Business, Energy and Industrial Strategy Committee (BEIS) has published the government’s response to the consultation on corporate governance reform. Back in May, we published a blog on Talking Business outlining some of the key proposals. The government has now highlighted which of these it intends to take forward.
The response focused on three key areas: (1) executive pay; (2) employee and customer voice; and (3) corporate governance in private businesses.
Executive pay
Levels of executive pay continue to move further away from the pay levels of ordinary members of the workforce. The government has questioned whether executive pay requires further reform to enable companies to show that they are acting on the concerns of shareholders and showing an interest in the wider stakeholder base.
Shareholder rights
The Financial Reporting Council (FRC) will be invited to:
- revise the UK Corporate Governance Code (the Code) to set out what steps a company should take if it encounters significant shareholder opposition to executive pay; and
- implement a public register of listed companies which have shareholder opposition of 20% or more to executive pay, alongside what steps are being taken to address any concerns.