The CIPD and High Pay Centre are calling for a major re-think of corporate governance in order to improve CEO pay transparency and to ensure boards recognise their broader responsibility to the workforce when decisions on senior pay are taken. In a joint response to a government corporate governance green paper, the two organisations call for all publicly listed companies to publish the ratio between the pay of the CEO and median employee and to have at least one employee representative on the remuneration committee.
CIPD chief executive, Peter Cheese, said:
‘Let’s create a new system, where decisions about executive pay are taken within a different context, one which places the firm’s human capital development – or workforce – at the heart of board decision making.’
Stefan Stern, director of the High Pay Centre, added:
‘Voluntary measures and modest reforms have been tried, but have not been effective. If CEO pay continues to increase at the same rate as it has done for the past 20 years, over the next two decades we could be seeing average CEO-to-average pay ratios of over 400:1 and certainly over 300:1, which is the level of pay ratio that is frequently seen in large US corporates.’