Tuesday, 24 January 2012

Remuneration reports and employee pay

One element of the announcements about exec pay is a requirement on companies to explain how they have "taken account of employee pay when they set board pay". Sounds OK doesn't it?

Actually Labour already tried to do something here. Five years ago, in a DTI (remember that?!) consultation on the Companies Act, the following question was asked:
Do you agree that companies need to report more effectively on the way in which they take pay and employment conditions elsewhere in the group into account in deciding directors’ remuneration? If so, how do you think this could be done?
From memory there was a pretty negative reaction, and a further round of consultation on a very minor tweak (there's a written statement here). In the end I think there was a tweak to the language to the effect that companies are technically required to state "how" they take employee pay and conditions into account. I think we can safely say the impact was... err... limited.

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