Yahoo Finance Britain's crackdown on unfair CEO pay rises is a flop
Government efforts to curb excessive pay rises for chief executives by empowering UK shareholders are a flop, according to a think tank report.
A report by the High Pay Centre (HPC) shows shareholders have voted just six times against chief executives’ salaries just six times in more than 700 votes at FTSE 100 companies over the past four years.
A ‘say on pay’ regime was introduced under the Conservative and Liberal Democrat government in 2013.
The move forced listed companies to put their future remuneration policies to a binding shareholder vote at their AGM at least every three years. Companies also hold advisory votes on their remuneration reports, which show what directors earned the previous year.
The government hoped the measures would curb the gap between the average pay of FTSE 100 chief executives and their staff, which has soared from 59:1 in the late 1990s to 145:1 today.
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But a report by the High Pay Centre suggests fewer than one in 10 shareholders rejected pay policies in the average vote between 2014 and 2018.
Only six votes saw company pay policies defeated, at Burberry, Intertek, BP, Smith & Nephew, Pearson and Royal Mail.
A total of 14 companies faced significant revolts more than once over the period, which suggests “significant dissent does not prompt companies to change their approach,” according to the think tank.
The HPC says companies which saw more than 20% of shareholders reject pay packages more than once include Sky, Experian, GlaxoSmithKline, Astra Zeneca and WPP.
The think tank said in a statement: “New HPC analysis shows investors are not interested in tackling inequality and excessive executive pay.
“Polling has repeatedly shown public support for more meaningful measures to address very high pay and economic inequality, including caps on top pay and worker representation on company boards, and our research will strengthen the case for such measures.”
But a government spokesman told the BBC: "We are strengthening these rules further by requiring firms to provide more detail about directors' pay, like the award of shares.
"These upgrades are making boards more accountable while enhancing our reputation as one of the best places in the world to work, invest and do business."
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