Speaking in Birmingham on Monday, (11-Jul-2016) at what was to be the start of her party election campaign, Ms May openly criticised the standards of governance at some of UK’s biggest businesses and set out plans to give workers and consumers representation on company boards and make fundamental changes to the way executive remuneration is approved by shareholders.
On Strategic Takeover Protections
“Shareholders – who are mostly companies investing other people’s money – are not the only people with an interest when firms are sold or close. Workers have a stake, local communities have a stake, and often the whole country has a stake….. A proper industrial strategy wouldn’t automatically stop the sale of British firms to foreign ones, but it should be capable of stepping in to defend a sector that is as important as pharmaceuticals is to Britain
On Better Governance
“It is not anti-business to suggest that big business needs to change. Better governance will help these companies to take better decisions, for their own long-term benefit and that of the economy overall.
On Board Diversity
“I want to see changes in the way that big business is governed. The people who run big businesses are supposed to be accountable to outsiders, to non-executive directors, who are supposed to ask the difficult questions, think about the long-term and defend the interests of shareholders.
“In practice, they are drawn from the same, narrow social and professional circles as the executive team and – as we have seen time and time again – the scrutiny they provide is just not good enough.
“So 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 workers as well.
On Pay for Performance
“I want to make shareholder votes on corporate pay not just advisory but binding. I want to see more transparency, including the full disclosure of bonus targets
“I want to simplify the way bonuses are paid so that the bosses’ incentives are better aligned with the long-term interests of the company and its shareholders.
On Pay Ratios
“the publication of “pay multiple” data: that is, the ratio between the CEO’s pay and the average company worker’s pay.
It remains to be seen how much of Ms May’s “Social Corporate Governance” makes it through the Brexit negotiations – let alone the inevitable lobbying from industry groups – however the sweeping breadth of commitments in Ms May’s opening speech tells us that the remainder of this Parliament will be the most governance focused of the past 20 years.
Watch this space!