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13/10/2016
Chris Philp MP has written a paper for the High Pay Centre (HPC) arguing that recent rises in total executive pay are a symptom of the emergence of ‘ownerless corporations’, that is organisations in which fragmented shareholdings and short-term investor horizons mean that there is poor oversight of companies. He suggests that high chief executive pay is no longer strongly associated with performance and, indeed, may be inversely related to company performance.
The HPC-published paper proposes mandatory publication of pay ratios between CEO pay and median employee total pay, arguing that this creates transparency and downward pressure on unduly high ratios. It also suggests annual binding votes on executive pay by shareholders similar to those that take place in Denmark and Holland. Philp, who is Conservative member for Croydon South, also calls for mandatory shareholder committees to be established including the company’s largest five shareholders but also including a non-union employee representative as a non-voting member.