BEIS corporate governance reform green paper: PLSA response
The PLSA has responded to the Department for Business. Energy and Industrial Strategy’s Green Paper setting out options for corporate governance reform.
The Green Paper makes a number of proposals relating to executive pay, stakeholder representation in corporate governance structures and the governance of private companies.
Our response highlights the findings of our annual review of AGM voting, demonstrating the failure of many companies to respond to significant levels of shareholder dissent over their pay practices. We recommend requiring companies to submit their pay policy to an immediate vote if the advisory vote on their pay award fails to achieve a ‘super majority’, regardless of whether the triannual vote on the pay policy is due. The response also highlights the value of pay ratios as an insight into the corporate culture of a company and supports proposals to require companies to publish this information.
On stakeholder representation, of the options proposed by the Government, we favour the introduction of stakeholder panels or committees, reporting via the annual report in the same manner as the remuneration or audit committee and including a non-executive director with responsibility for feeding the committee’s views to the board.