Are you ready for the requirement to report annually on pay ratios between your CEO and average employees?
Subject to Parliamentary approval, new regulations will come into effect from 1 January 2019 meaning that listed organisations with more than 250 employees will start reporting their pay ratios in 2020.
This is the first time that listed companies will legally be required to annually publish and justify pay difference between chief executives and their staff
This government initiative is part of the modern Industrial Strategy which is helping ensure the UK remains a world-leading place to invest and do business and follows concerns that some Chief Executives have been paid salaries completely out of kilter with company performance.
Not only that, but the directors of all large companies will also have to set out how they are acting in the interests of both employees and shareholders. In addition to the reporting of pay ratios, there will be requirements to:
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report on how directors take employee and other stakeholder interests into account
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report on their responsible business arrangements
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show what effect an increase in share prices will have on executive pay to inform shareholders when voting on long-term incentive plans
Will this give employees a greater voice in the boardroom as hoped? My thoughts are that it will certainly encourage greater consideration of employee involvement and engagement, which could be hugely beneficial to both the employer and their teams.
Need help involving or engaging your team? Get in touch with Redway HR.