In its recent report on UK Corporate Governance, the Business, Energy and Industrial Strategy Committee made recommendations for reforms that could, if adopted, mark a change in the structure of executive remuneration packages.
Failings in UK Corporate Governance
Despite the UK's strong system of corporate governance, concerns have grown over the lack of public trust in big business and increasingly high levels of executive pay which do not always relate to improved and sustainable performance. Following last year's well-publicised discovery of high-profile corporate governance failings, the government expressed a commitment to improving behaviour.
This spring, the Business, Energy and Industrial Strategy Committee, appointed by the House of Commons to examine areas of government policy, was tasked with conducting an enquiry into UK corporate governance. In its subsequent report, the Committee does not identify a need for drastic change (it supports the continuation of a "comply or explain" approach to the UK Corporate Governance Code); however, it does highlight areas where it perceives reform is needed. Media attention focussed on the Committee's proposal that, by 2020, at least half of all new appointments to senior and executive management level positions in listed companies should be women. However, there are other recommendations on pay which could have an impact on the structure of executive remuneration.