COMMONS

Gender pay gap and executive pay examined by Committee

23 March 2018

The Business, Energy and Industrial Strategy (BEIS) Committee launches inquiry on executive pay and the gender-pay gap in the private sector.

Business reporting requirements

The BEIS Committee is looking at these issues in the context of concerns about the overall level of executive pay and bonuses and as the deadline for gender-pay gap reporting is soon approaching (on 4 April 2018).

On gender pay, the inquiry will look at issues around the compliance of businesses with reporting requirements on the gender pay gap, such as whether the regulations are properly capturing the salaries of staff, and what steps companies are taking to address the pay gap. The Committee will also look at measures to be taken against companies which do not comply with reporting requirements.

On executive pay, the Committee will be checking on the implementation of the Prime Minister's undertaking to crack down on excessive executive pay.

It will look at progress in simplifying the structure of executive pay and pay reporting, and the role of remuneration committees, institutional investors and shareholders in curbing excessive pay. This will follow up the previous BEIS Committee report in April 2017 which made a range of recommendations on corporate governance and executive pay.

The Committee is likely to examine the use of ‘clawback’ provisions to recover cash and share bonuses in the event of poor performance.  In the recent case of Carillion, clawback terms were relaxed in 2016, meaning that cash and share bonuses could only be recovered if the firm's results were misstated or the executive was "guilty of gross misconduct".

An issue of fairness

Rachel Reeves, Chair of the Business, Energy and Industrial Strategy Select Committee, said:

"Excessive executive pay and gaps in gender pay are at root an issue of fairness. Pay awards for top bosses which vastly outstrip worker pay and which owe little to building genuine long-term value in a company are impossible to justify and damage the social contract between business and the public.

Unjustified executive pay awards are the most corrosive influence on public trust in business and businesses must face up to their responsibilities and tackle this problem. If businesses don't step up on executive pay, Government will need to step in.

Nearly fifty years on from Barbara Castle's Equal Pay Act it is completely unacceptable that women are not fully rewarded for their jobs they do. Businesses must pay both women and men fully for the work they do and if they fail to do so they undermine public trust in how they operate.

Transparency on gender pay is only the beginning. We need to examine why these pay gaps persist, why within the same sector there may be companies with wildly differing pay-gaps, and what remedies are needed to tackle them."

This inquiry is initially scheduled for two evidence hearings with an opening session on gender pay reporting due to take place on Tuesday 17 April and a session on executive pay on Wednesday 16th May. Witness details will be confirmed in due course.

Send us your views

Gender pay gap

The Committee invites written evidence on the following questions:

  • Whether the annual information related to pay required under the Equality Act 2010 is sufficient? Should any further information be required?
  • What is the extent of compliance? Is the information accurate? 
  • How effective are the sanctions for non-compliance with reporting requirements?
  • What requirements, if any, should there be on companies to address gender pay gaps?

Executive pay

The Committee invites written evidence on the following questions:

  • What progress has been made on implementing the recommendations on executive pay by the previous Committee in its 2017 report on Corporate Governance?
  • What improvements have been made to reporting on executive pay in the last 12 months? 
  • What steps have been taken by Remuneration Committees and institutional investors to combat excessive executive pay in the last 12 months.
  • What further measures should be considered?

You can submit evidence through our evidence portal.

Written submission deadlines

For evidence on gender pay gap reporting, the deadline has been extended to Friday 27 April 2018.

For evidence on executive pay, Tuesday 8 May 2018. Submissions should be made separately. 

Further information

Image: iStockimage

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