MP calls for Sweden-esque Boardroom reforms
A new report has called for Boardroom reforms similar to Sweden.
The proposals aim to curtail excessive rewards for executives by giving more power to shareholders.
In a report for High Pay Centre, titled ‘Restoring Responsible Ownership: Ending The Ownerless Corporation and Controlling Executive Pay’, Chris Philp, MP for South Croydon, calls for more transparency.
The Scandinavian country requires shareholder nomination committees to provide downward pressure on pay awards – The Independent reports.
Implementing this will, according to Philp, “re-empower shareholders [and end the] ownerless corporation.”
He added to The Independent that there was nothing anti-free market about giving shareholders more leverage.
Baron Myners CBE said of Philps’ proposals: “They will not be universally welcomed by either company directors or fund managers because they challenge the existing order that has suited these two communities so well.”
“This gap is continuing to grow despite our latest data showing that it leads to a real sense of unfairness that has a clear impact on employee motivation,” he said.
“[Another] CIPD study showed that six in ten (59%) of employees say that high levels of CEO pay in the UK demotivates them at work. The message from employees is clear: ‘the more you take, the less we’ll give’. This kind of culture in the workplace is bad for both employers and employees.
“Furthermore, when pay for those at the top is not linked to either personal performance or business outcomes, it undermines trust in business, not just from employees but from customers and other stakeholders.”
“We need to see more action from the top – either from Boards or more Chief Executives’ themselves taking a public stand and putting a stop to these inexplicably high salaries and bonuses. As we head into an uncertain economy, this can only become a more pressing issue.”
However, high CEO salaries can be used for other means aside from personal gain. For example, the Royal Bank of Scotland’s CEO, Ross McEwan, gave part of his remunerations to charities for the third year in a row this year.
Similarly, Rowan Gormley, the CEO of Majestic Wines, announced in July that around £7million (which includes his bonus) could be shared with senior staff if their targets were achieved.