- Prime Minister May ditches promise to force shareholder votes on pay.
- May promised action to make economy “that works not for a privileged few but for every one of us.”
- Allies of PM believed legislation would be voted down by Tory MPs.
- U-turn follows abandoned pledge to put workers on company boards.
LONDON — When Theresa May became prime minister she promised to tackle the huge levels of pay in company boardrooms as part of her mission to build a Britain that “that works not for a privileged few but for every one of us”.
In a speech that angered some business figures, May promised that executives “who earn a fortune” would in future be held to account by their workers.
May’s general election manifesto went even further promising that “the next Conservative government will legislate to make executive pay packages subject to strict annual votes by shareholders.”
That promise will now be broken.
Instead, companies will simply have to publish information about pay ratios at their companies, with no requirement to hold shareholder votes on pay.
“Our response will introduce reforms to make our largest companies more transparent and more accountable to their staff and shareholders and restore the balance between a company’s performance and executive pay,” one government official told the Financial Times.
Allies of the PM said that her failure to win a majority in the general election meant that any attempt to legislate on boardroom pay would fail.
The U-turn puts her government at odds with Jeremy Corbyn’s Labour party, which promised a new tax on high earnings.
Under Labour’s plans, executives earning over £330,000 a year would be hit by an “excess pay levy” of 2.5 % with 5% charged on those earning over £500,000.
The axing of May’s pledge to tackle boardroom pay follows May’s abandonment of a previous pledge to force companies to put workers on company boards.
This pledge was dropped by May following opposition from business and members of her own Cabinet.
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