Business

Government to decide if firms must reveal pay ratios

'Salary' spelt on wooden bricks Image copyright Getty Images

The government is set to reveal whether companies should publish their pay ratio - the salary gap between their executives and wider workforce.

The question was first raised in a government discussion paper last year.

The move came after public pressure on firms to justify top pay packages.

A three-month consultation period has also asked for submissions on whether shareholders should be given a binding vote over executive pay, and on how to put worker voices in the boardroom.

Reports from Sky have indicated that 1,000 UK listed firms will be forced to publish their pay ratios.

It is unclear whether the sum used to measure executive remuneration would be their basic pay, or total package of financial benefits.

When he launched the consultation last November, Business Secretary Greg Clark said that any new reporting measure would have to be carefully designed.

'Limited and late'

Earlier this month, the High Pay Centre, a think tank, said top chief executives' pay had fallen in the past year, but there was still "a huge gap" between them and the rest of their staff.

The bosses of FTSE 100 companies now make on average £4.5m a year, down 17% from £5.4m in 2015, it added.

The think tank said the fall was welcome, but "limited and very late". It said the average UK full-time worker on pay before tax of £28,000 would take 160 years to earn the same amount.

The outcome of the Corporate Governance Reform Green Paper consultation is expected to be revealed after the UK Bank Holiday weekend.

The Department for Business, Energy and Industrial Strategy said it would not comment on what the government's response to the consultation would be.

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