Just before she became Prime Minister, Theresa May announced a number of corporate governance and executive remuneration proposals, notably requirements for worker representation on company boards. Now the Business, Innovation and Skills (BIS) Parliamentary Committee has picked up the baton and, following on from its recent high-profile sessions on BHS and Sports Direct, has started an inquiry into this area, focusing on executive pay, directors' duties, boardroom composition, worker representation and executive gender balance.
The issues the BIS Committee wants to look at include:
- Executive pay – should it take account of companies' long-term performance? And reflect the executives' "added value" relative to more junior employees? Do recent shareholder actions suggest that shareholders need a greater role?
- Board makeup – how would the PM's proposals on worker representation on boards and remuneration committees work? How many employees would be added to boards and how would they be selected? In what ways can greater diversity be achieved, in particular to increase the number of women in executive positions (along the lines of the Davies Review, which led to the growth in the proportion of female non-executive directors)?
- Director duties – is the law sufficiently clear on the role of directors and non-executive directors? Does it balance the interests of shareholders and employees? Is there an effective challenge to boardroom decisions? Should companies be subject to additional duties on transparency, including on their advisors?
The BIS Committee will take written submissions until 26 October and will then presumably embark on its public sessions.