Big UK firms face calls to tackle ‘corporate greed’ and cap executive pay | Business News

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The UK’s biggest companies are facing pressure to impose caps on bosses’ pay as part of recommendations to tackle “corporate greed”.

The report by the business, energy and industrial strategy committee of MPs highlighted “huge differentials” in awards at top firms following a string of pay rows, such as those at Unilever and BT.


The most high profile was a backlash against £85m for Jeff Fairburn when he led housebuilder Persimmon – a reward that ultimately led to him being forced out of the door.

MPs argue it is time to break what they regard as a heavy reliance on overgenerous, incentive-based executive pay that is deliberately made complex to shake off shareholder opposition.

The report says failing remuneration committees should face action from the regulator formed to replace the Financial Reporting Council, which has been ridiculed by the committee for its role in the collapse of Carillion.

It said the new Audit, Reporting and Governance Authority must be “more robust and proactive in bearing down on excessive executive pay”.

The MPs recommended pay committees “set, publish and explain” an absolute cap on pay for executives in any financial year.

They said more could be done to tackle disparity between executive pay growth and workers by introducing schemes such as profit-sharing and boosting pensions – the latter seen as a particular issue for investors in the looming AGM season.

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Committee chair Rachel Reeves says it is wrong that executive pay is rising four times faster than average wages

Several FTSE 100 firms, including HSBC and Centrica, have moved to slash payments to bosses in recent weeks following anger over discrepancies between those at the top and staff.

Committee chair Rachel Reeves said: “The roll call of dishonourable executive pay decisions at firms including Persimmon, Unilever, Royal Mail, BT, Melrose and Foxtons tell the all-too-familiar tale of corporate greed which is so
damaging to the reputation of business in our country.

“But these examples also highlight the persistence of executive pay policies where far too little weight is given to delivering genuine long-term value, investing in the future, or ensuring rewards are shared with workers.

“When the company does well, it is workers and not just the chief executive who should share the profits. Why should chief executives have a more generous pension scheme than those who work for them?”


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