May’s high pay crackdown abandoned

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The Government has backed out of plans to introduce more binding votes on how top executives are paid, according to reports.

Prime Minister Theresa May remains committed to improving transparency on high pay as the Government lines up a paper on corporate governance next week, aides told the Financial Times, but others measures to rein in excessive packets are likely to be dropped.

Some investor groups had been calling for a threshold of 25 per cent of votes at an AGM to force company remuneration policies to be put to shareholders.

However, the Telegraph also reports that the need to introduce new legislation would be arduous for a minority Government.

A government official told the FT: “Our response will introduce reforms to make our largest companies more transparent and more accountable to their staff and shareholders and restore the balance between a company’s performance and executive pay.

“Our system of corporate governance is rightly held in high esteem but there is more to be done.”

The Government originally said it would consult on ways to better link performance to bonus payouts, as well as paying out share options to executives over a longer period to encourage longer-term thinking.

One idea that could make the paper is the publication of pay ratios showing the gap between executives and staff, which was floated by business secretary Greg Clark last year.

Significant names in the pensions and investment space have levied pressure on corporates over pay packages recently, including Standard Life and Royal London, which took on advertising giant WPP, while some investors called for a protest over Schroders chief executive Peter Harrison’s remuneration.