The House of Commons’ Business, Energy and Industrial Strategy Committee has released its recommendations on how businesses can address mistrust among the public after a series of high profile corporate scandals and failings.
The report recommends a number of actions on executive pay, a new and stronger voluntary code of governance for private companies, better reporting by companies on how directors fulfill their duties and responsibilities and a major expansion of the role and powers of the Financial Reporting Council (FRC).
As a leading member of the Committee and author of the report, Richard said:
“Following our inquiries into BHS and Sports Direct, we are calling for more controls on senior executive pay, toughened up governance rules and a Red/Yellow/Green independent assessment of how company boards work. These measures are essential if we are to maintain the country’s strong international standing in corporate governance.”
On executive pay, the Committee recommends the simplification of executive pay and putting an end to long-term investment plans (LTIPs), which lack transparency and can distort decision-making. The Committee also suggests workers be represented on remuneration committees and for the chairs of remuneration committees to be expected to resign if shareholders fail to approve the company’s pay policy.
On gender diversity, the Committee calls for the Government to set a target that from May 2020 at least half of all new appointments to senior and executive management level positions in the FTSE 350 and all listed companies should be women.
The full report can be read here.