Most AAT members believe that compulsory pay ratios are the only way to control levels of executive pay, rather than voluntary initiatives, according to research which also indicated the majority feel government plans merely to require publication of pay ratios are unlikely to have an impact on remuneration rates
An AAT survey of members to help shape its response to the Department for Business, Energy and Industrial Strategy (BEIS) green paper on corporate governance reform found that more than 90% favour the introduction of pay ratios.
In contrast, just one in five (21%) AAT members believe government plans to introduce a legal requirement to publish pay ratios will have any effect.
Support was strongest for a 20:1 pay ratio as previously proposed by both former Conservative party leader David Cameron and the leader of the Labour party, Jeremy Corbyn (40%).
There was also support for a 40:1 pay ratio (22%), a figure the High Pay Centre think-tank suggests companies should move towards, and a 75:1 pay ratio (10%) as adopted by the retailer the John Lewis Partnership.
No members backed a pay ratio of 150:1, the current average for FTSE 100 companies, while only 7% were in favour of having no pay ratio at all.
Adam Harper, AAT director of strategy and professional standards said: ‘Our member’s views on pay ratios are clear - pay ratio reporting should be an absolute minimum but is unlikely to deliver significant change. Instead, given the apparent failure of previous approaches, the time for a compulsory pay ratio appears to be moving ever closer.’
The full AAT corporate governance reform consultation response is here.
