Theresa May has signalled she wants to change the way that big business is governed, with legal curbs on top tier pay levels and a broader range of non-executive directors, including company workers, if she succeeds in her bid to become the next leader of the Conservative party and prime minister
In a preview of the speech she will make later today in Birmingham launching her national campaign, May said those running large companies are ‘supposed to be accountable to outsiders, to non-executive directors, who are supposed to ask the difficult questions, think about the long-term and defend the interests of shareholders.’
May wrote: ‘In practice, they are often drawn from the same narrow social and professional circles as the executive team and the scrutiny they provide is often limited. If I’m prime minister, we’re going to change that — and we’re going to have not just consumers represented on company boards, but employees as well.’
The current home secretary also points out that the FTSE is trading at about the same level as it was 18 years ago and is nearly 10% below its peak. Yet in the same period executive pay has more than trebled and there is what May describes as ‘an unhealthy and growing gap’ between what the UK’s largest companies pay their workers and what they pay their bosses.
‘I want to make shareholder votes on corporate pay not just advisory but binding. I want to see more transparency, including the full disclosure of bonus targets and the publication of “pay multiple” data: that is, the ratio between the CEO’s pay and the average company worker’s pay.
‘And I want to simplify the way bonuses are paid so that the bosses’ incentives are better aligned with the long-term interests of the company and its shareholders,’ May said.
May’s speech will also reference what she sees as growing inequalities in the housing market. She says that the Bank of England’s approach of adopting very low interest rates and quantitative easing, ‘has helped those on the property ladder at the expense of those who can’t afford to own their own home.’
The leadership contender says: ‘It is not anti-business to suggest that big business needs to change. Better governance will help these companies to take better decisions, for their own long-term benefit and that of the economy overall.’
May’s challenger for the top role in the Conservative party is Andrea Leadsom, currently the energy secretary, who has faced criticism over claims she inflated her CV to suggest more financial experience working in the City than was the case.
