Tucked away right at the end of Prime Minister’s questions yesterday, immediately before the Autumn Statement, was a very short question: “Does the Prime Minister believe that big companies should put a worker on the board?” Given recent headlines such as “Theresa May backtracks on putting workers on company boards” (The Telegraph, 21 November) and “Theresa May: I won’t force companies to put workers on their boards” (The Guardian, 21 November), one might be forgiven for thinking that this was a planted question, perhaps indicating that the press had got hold of the wrong end of the stick on this issue. But no, the question was from Gloria de Piero (Lab, Ashfield).
The background to this is of course the disquiet in the media and amongst the public about “excessive” levels of executive pay. Investors too are concerned, as shown by the numerous examples of significant votes (albeit non-binding) against the implementation of remuneration policies during the 2016 AGM season on which we previously reported. Theresa May made pledges about corporate governance before she became PM, including not only having employee representatives on boards, but also making the vote on implementation of the remuneration policy binding. The Business, Innovation and Skills Committee launched a corporate governance inquiry in September, focusing on executive pay.
Under the directors’ remuneration reporting regulations, companies are supposed to disclose what they have done to consult employees about executive pay packages. In practice, usually this is either a blank or a statement that staff are not consulted, which doubtless has added fuel to the flames.
The speech that generated the headlines on Monday was given by Theresa May at the CBI annual conference: “I can categorically tell you that this is not about mandating works councils, or the direct appointment of workers or trade union representatives on boards”. The proposal was watered down to “ensuring employees’ voices are properly represented in board deliberations.” A green paper has been promised later in the autumn “that addresses executive pay and accountability to shareholders, and how we can ensure the employee voice is heard in the boardroom.”
Odd then that the answer to The Question was “I believe that we should see workers representation on boards and … this government is going to deliver on that.” Will they, won’t they? We await the green paper with interest!