The Business, Innovation and Skills Committee has launched a corporate governance inquiry, which includes a focus on executive remuneration.

The chair of the committee, Ian Wright MP, said: “Whopping pay awards to senior executives are not only vastly bigger than workers could ever expect to receive but often seem to have very little relationship to company performance. While there has been some recent shareholder actions against these ever larger pay packages, can we have any confidence that the current framework for controlling pay is working? As a Committee, we will want to look at whether executive pay should take account of companies’ long-term performance and whether the Government should intervene to control executive pay.”

Questions raised about executive pay are:

  • What factors have influenced the steep rise in executive pay over the past 30 years relative to salaries of more junior employees?
  • How should executive pay take account of companies’ long-term performance?
  • Should executive pay reflect the value added by executives to companies relative to more junior employees? If so, how?
  • What evidence is there that executive pay is too high? How, if at all, should Government seek to influence or control executive pay?
  • Do recent high-profile shareholder actions demonstrate that the current framework for controlling executive pay is bedding in effectively? Should shareholders have a greater role? (see our post on Legal & General’s views [LINK] on this issue)
  • Should there be worker representation on … remuneration committees? If so, what form should this take? (for further information, see our post on this topic).

The deadline for written submissions is 26 October.