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With the spotlight on executive salaries, listed companies need to adapt to forthcoming legal changes.
Philippa Lamb introduces our speakers: Richard Higginson, Head of Reward at Towry, Caroline Normand, Deputy Director for Corporate Law and Governance at the Department of Business Innovation and Skills Rob MacLachlan, Editor Of People Management magazine Katharine Turner, Practice Leader, Executive Compensation UK at Towers Watson.
First we hear Katharine Normand explain why the Government is tackling the issue now and then Philippa gives some statistics to back up the issues and reminds us that for some time shareholders have voiced opposition to huge salaries for indifferent or poor performance and explains what companies will have to do to comply with forthcoming law. Rob MacLachlan points to public opposition to the widening pay gap as well as shareholder anger that has brought about the changes.
Shareholders will have a say in the compensation decisions in the companies in which they invest, so they will be encouraged to engage more actively. Will they do this? Katharine explains the measures proposed to help shareholders make informed decisions and later, why personal accountability has its downside. Richard Higginson explains the dangers of taking things too far and Rob agrees that there might be some unintended consequences.
Transparency is another issue under discussion and Katharine outlines the extremely complicated and unclear ways in which executives are paid. Rob envisages a pay ‘league table’ linked to performance. Richard thinks keeping it simple is the answer.
Next, Philippa throws ‘pay ratios’ in to the mix. Having explained that this means the difference between what the average employee and the average executive earn, Caroline explains why this concept was left out of the Government’s original mix.
Pending the passing of the Act, Philippa wonders what organisations should be doing. Planning ahead seems to be the name of the game: listen to the practical suggestions from our speakers.
Next month we will look at issues around Dispute Resolution. Join us then.