UK: HPC analysis of FTSE350 pay ratios

The High Pay Centre has today published analysis of median CEO/median employee pay ratios in the FTSE350. In 2020/21, the ratio was 44:1, down from 53:1 in 2019/20. The report notes, however, that the 69 companies reporting in the first quarter of 2022 had a ratio of 63:1 - up from 34:1 in 2021. For further information see here.

UK: Government responds to BEIS Committee report on executive rewards

Earlier this year the House of Commons Business, Energy and Industrial Strategy Committee published its report Executive rewards - paying for success: see here (pdf). The Committee made various recommendations, including that there should be an employee representative on remuneration committees. The Government's response was received by the Committee earlier this month and published yesterday: see here. The response has been described as a "missed opportunity" by the Committee's Chair, Rachel Reeves MP: see here.

UK: BEIS Committee report - 'Executive Rewards: paying for success'

The Business, Energy and Industrial Strategy Committee published its report 'Executive Rewards: paying for success' today: see here or here (pdf). The report is critical of the role played by institutional investors, remuneration committees and the Financial Reporting Council (FRC). The Committee calls for the simplifcation of pay, advocating a structure based on fixed salary plus deferred shares that would vest over a long period (and subject to provisions designed to prevent 'rewards for failure'). It also calls for remuneration committees to have at least one employee representative. 

The Committee is strongly supportive of the creation of the new Audit, Reporting and Governance Authority (ARGA), to replace the FRC, and states that the ARGA should be "a more empowered, aggressive and proactive regulator that has the ability to take decisive action, where necessary, on executive pay and its reporting" (para. 11). Many of the Committee's recommendations are directed at the ARGA, particularly with regard to the revised Stewardship Code and its enforcement, as well as the expectations placed on asset owners. The Committee also recommends that the ARGA should become responsible for monitoring the impact of the new Wates Principles of Corporate Governance for Large Private Companies.

UK: Government green paper on corporate governance

The Financial Times newspaper reports that the Government's green paper on corporate governance will be published tomorrow and that this will set out proposals for, amongst other things, an advisory role for worker representatives on remuneration committees and the mandatory publication of pay ratios.

UK: Investment Association publishes updated Principles of Remuneration

The Investment Association - a trade body representing UK investment managers, whose members collectively manage over £5.7 trillion - has today published an updated edition of its Principles of Remuneration: see here (pdf). A short summary of the changes made in the new edition is available in the open letter sent by the IA to FTSE350 companies: see here (pdf). The IA is calling for companies to disclose pay ratios, in particular between the CEO and median employee and the CEO and other executive directors.

UK: High Pay Centre research - FTSE100 CEO pay

The High Pay Centre yesterday published research findings in respect of the pay of FTSE100 chief executives: see here (pdf). The headline finding - widely reported in the media (see, e.g., here and here) - concerned the ratio of FTSE100 CEO pay to the median level in the UK economy, reported as 148:1.

USA: SEC adopts pay ratio disclosure rule

The Securities and Exchange Commission has this week adopted a final rule that will require certain public companies to disclose the ratio of the compensation of their chief executive officer to the median compensation of their employees: see here (pdf). The SEC was required to adopt such a rule in order to implement section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

A short fact sheet explaining the new rule is available here. An update on the SEC's progress in implementing the mandatory rule making provisions of the Dodd-Frank Act can be found here.

USA: SEC publishes pay ratio disclosure rule

The Securities and Exchange Commission has published its proposals in respect of the obligation imposed on it, under Section 953 ("Executive compensation disclosures") of the Dodd-Frank Wall Street Reform and Consumer Protection Act, to require issuers to disclose (amongst other things) the ratio of the median of the total compensation of all employees to the annual total compensation of the chief executive officer: see here (pdf).