Britain Looks to Address Inequality With Executive Pay Measures

The difference is not as stark in Britain, but has nevertheless increased significantly in recent years. The average chief executive of a company listed on the FTSE 100, the country’s benchmark stock index, made 129 times as much as a regular employee last year, according to the Chartered Institute of Personnel and Development. That was up from 45 times as much 20 years ago.

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Prime Minister Theresa May wrote that some companies “have ignored the concerns of their shareholders” about executive pay.

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Pool photograph by Ben Stansall

But it has become an increasing point of contention here.

In one case, investors in the energy company BP protested against the $19.6 million compensation package awarded to the company’s chief executive, Robert W. Dudley, in 2016 — a majority voted against the deal in a nonbinding vote. And the salary of Martin Sorrell, the head of the advertising giant WPP, regularly attracts pushback from shareholders. Mr. Sorrell made 48 million pounds, or about $62 million, last year.

That expanding gulf has spurred the government’s proposals, which it plans to put into effect by June. In addition to forcing the publication of pay ratios, officials would set up a public register listing companies that faced opposition on pay packages from at least a fifth of shareholders.

Listed businesses would be pushed to improve employee representation on their boards, by assigning a nonexecutive director to represent workers, creating an employee advisory council or nominating a director from the work force. There is no punishment for failing to do so, but companies would have to announce why they had not followed the requirements.

“Today’s reforms will build on our strong reputation and ensure our largest companies are more transparent and accountable to their employees and shareholders,” Greg Clark,…

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