Big companies urged to split profits with staff and give workers a say in executive pay

Big companies should split their profits with staff and give employees a say in how chief executives are paid, or risk a complete breakdown of trust in the capitalist system, MPs have said.

A report by the business select committee said a series of “shaming” decisions – including a £75m bonus handed to the boss of housebuilder Persimmon – showed a need for fresh curbs on “executive greed … baked into the remuneration system”.

Proposals made in the report include:

  • Workers to join company pay committees.
  • Profit-sharing schemes to benefit staff.
  • Reducing “variable pay” bonuses.
  • An absolute cap on bosses’ remuneration.
  • A new financial regulator to monitor pay schemes.

The Labour MP Rachel Reeves, who chairs the committee, said: “Eye-watering and unjustified CEO pay packages are corrosive of trust in business and threaten to undermine the public’s support for the way our economy operates.

“When the company does well, it is workers and not just the chief executive who should share the profits.”

Warning that faith in Britain’s economic system could be undermined by failure to address high pay, the committee said that without major reforms there would be a “perception of institutional unfairness that, if not addressed, is liable to foment hostility and undermine social cohesion and support for the current economic model”.

The report found that executives were still enjoying pay packages that were often “patently unjustified”, despite a promise by Theresa May to tackle corporate excess.

Original Source

 

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