PRIME minister promises to introduce reforms over excessive boardroom pay
Theresa May is drawing up legislation to tackle unscrupulous bosses and excessive boardroom pay, as proof that she intends to build a Britain ‘that works not for a privileged few but for every one of us’.
Mrs May’s promise to tackle ‘irresponsible behaviour in big business’ has been under the spotlight in her first weeks in office, with criticism by MPs of Mike Ashley at Sports Direct and Sir Philip Green’s stewardship of BHS.
The prime minister sees both cases as examples of a dangerous breakdown in trust between workers and some bosses, who she accuses of contributing to an ‘anything goes’ capitalist culture. Mrs May has said the Brexit vote was, in part, a protest by people who feel they have gained little or nothing from globalisation and that some corporate leaders ‘still don’t get it’.
The prime minister’s allies say that a package of measures to improve corporate governance are being drawn up and will be published in the coming weeks.
Mrs May promised this month to broaden the pool of non-executive directors, so that they were no longer drawn from ‘the same narrow, social and professional circles as the executive team’.
‘If I’m prime minister we’re going to change that system and we’re going to have not just consumers represented on company boards, but employees as well,’ she said.
The idea is opposed by some corporate leaders, who fear that ‘worker directors’ would end up being selected by trade unions. Mrs May’s team say they would act as a deterrent to the ‘appalling’ working practices adopted by Sports Direct, which were heavily criticised by MPs this month.
Mrs May’s reforms are also expected to include a requirement for more transparency about pay, including making shareholder votes on corporate pay not just advisory, but binding. ‘Pay multiple’ data would also be published to show the gap between a chief executive’s pay and those of workers.
The prime minister has also talked about toughening competition law to protect consumers and a crackdown on corporate tax avoidance and evasion. ‘It is not anti-business to suggest that big business needs to change,’ she said at the launch of her leadership bid.
Mrs May’s proposals are partly a response to the social divide highlighted by the Brexit vote; politicians across Europe are grappling with how to counter the rise of populist parties that have gained ground because of public unhappiness over the effects of globalisation.
But they also reflect a push by the new prime minister into the centre ground and an attempt to colonise territory once occupied by Labour.
The prime minister has also revealed in her first days in office a practical streak. Having sounded a critical note about foreign takeovers of flagship British companies, she enthusiastically backed the proposed takeover of Arm Holdings, the UK’s pre-eminent technology company, by Japan’s SoftBank.
Mrs May will meet SoftBank’s founder, Masayoshi Son, in Downing Street to discuss the friendly £24.3bn all-cash deal for the Cambridge-based company. Her spokesman said last week that the deal was ‘in the national interest’. Mr Son, who discussed it on the phone with Mrs May last week, will set out his plans to double the number of employees at Arm over the next five years and to keep the company’s headquarters in Cambridge.
The prime minister’s team say Mrs May will seek further reassurances that the deal is good for Britain; Mr Son’s allies say he wants to convince Mrs May that SoftBank has good intentions.
‘He’s well aware of how some of Kraft’s promises when they bought Cadbury turned to dust,’ said one person close to SoftBank.
‘He wants to show Theresa May that he is serious.’
Mrs May says some strategic industrial sectors such as pharmaceuticals need more protection from foreign takeovers, but in the case of SoftBank she was keen to welcome the proposed investment as proof that post-Brexit Britain was ‘open for business’.
Published in Dawn, Business & Finance weekly, August 1st, 2016