UK: some reform proposals from the Labour Party

The Shadow Minister for Business, Innovation and Skills, Mr Chuka Umunna MP, delivered a speech today at the Institute for Public Policy Research in which he set out various proposals for the reform of the UK's corporate governance framework: see here. Mr Umunna said that reform was best achieved through changes to the UK Corporate Governance Code rather than legislation and he endorsed the recommendations made by the High Pay Commission (in the report it published last year) with regard to the transparency of executive rewards. He also said that consideration should be given to changing dramatically the composition of the nomination and remuneration committees. To quote directly from his speech:

We should consider moving towards a system which other countries have adopted where the nomination committee is not composed of board members but is composed of the four or five biggest shareholders in the company along with the non-executive chair of the board – that same committee, composed of shareholders, also recommends the structure and amount of remuneration. This would create far stronger lines of accountability to those who ultimately own the business and would promote the shareholder activism and engagement which is key".