New UK exec pay rules come into force
Alongside the pay ratio reporting, there will be a new statutory duty on companies to outline the impact of share price growth on executive pay outcomes.
The new year starts with new rules concerning the pay of executives of large UK listed companies. The new pay ratio regulations will apply to big UK listed companies that have more than 250 employees, with the first statutory disclosures set to be provided from the start of 2020.
These disclosures will make companies justify their pay for top bosses and account for how those salaries relate to wider employee pay. The companies will have to disclose annually the ratio of their CEO’s pay to the median, lower quartile and upper quartile pay of their UK employees.
The new rules came into force on Tuesday, January 1, 2019. Under these rules, the UK’s biggest companies will have to disclose and explain every year their top bosses pay and the gap between that and their average worker.
On top of the reporting of pay ratios, the new laws also require all large companies to report on how their directors take employee and other stakeholder interests into account and require large private companies to report on their corporate governance arrangements.
The pay ratios regulations are set to hold Britain’s largest businesses to account for excessive salaries, while recent changes to the corporate governance code give employees a greater voice in the boardroom.
Alongside the pay ratio reporting, there will be a new statutory duty on companies to outline the impact of share price growth on executive pay outcomes. This is set to secure greater clarity for shareholders about the impact that significant share price growth can have on executive pay outcomes and whether discretion has been exercised before pay awards are finalised.
Let’s recall that, online trading services provider Plus500 Ltd (LON:PLUS) is planning an Extraordinary General Meeting (EGM) in order to secure approvals of the revised remuneration agreements for its directors. The meeting is scheduled for 10.00am on January 21, 2019. The company said its Remuneration Committee had developed a new remuneration structure “which is sensitive to the UK listing environment and associated corporate governance best practice where appropriate”.