On Monday, Chris Philp, a Conservative MP and member of the Treasury select committee, put forward new proposals on executive pay. If implemented, they see much higher levels of shareholder oversight and public scrutiny.
This is a subject that is central to Theresa May’s plans for post-Brexit Britain. This week, Mrs May took her ideas to tackle bad behaviour in the boardroom to the G20.
In formulating policy proposals, these ideas are developing from leadership campaign pledges on their way to becoming law. Before taking up residence at Number 10, Mrs May said that “It is not anti-business to suggest that big business needs to change”.
Brexit and executive remuneration are more closely linked than may at first appear.
The Prime Minister said that countries must “not ignore the fact that there is sentiment out there in a number of countries which is anti-globalisation”. Some of this sentiment is fuelled by public anger on corporate tax and executive pay.
So, what could be coming down the tracks for Britain’s boardrooms?
The most tangible proposal is for a new shareholder committee with a role on pay and bonuses, corporate strategy and performance and recommendations to AGMs on the appointment and removal of directors.
The committee would include nominees from each of the five biggest shareholder. The chairman and an employee representative would also take part as non-voting members.
In addition, Mr Philp is proposing mandatory publication of the ratio between the pay levels of median workers and the chief executive. This promises to reveal some eyebrow-raising ratios between the average employee and some of the UK’s highest paid individuals.
Annual shareholder meetings, already producing headline grabbing confrontations, may become even more newsworthy in years to come.
No country for young men (or women)
In recent years, the UK has posted some of the most impressive economic growth figures amongst G8 countries. The graduate recruitment market responded to this, with a huge increase in openings for Britain’s university leavers.
Is this recovery now threatened by economic uncertainty surrounding the UK’s vote to leave the European Union? Initial findings released this week by the Association of Graduate Recruiters suggests a difficult time ahead for the country’s latest cohort of jobseekers.
Earlier in the year, employers had told the Association that they expected vacancies to increase by about 2%. The Association’s chief executive, Stephen Isherwood, is reported in the Financial Times as noting that this is no longer the case:
“Something has changed over the past few months. There are a smaller number of vacancies this year than there were last, and the level of economic uncertainty has to be a major contributing factor.”
The expectation of a 2% increase has now turned into a fear of an 8% decline. The Association’s survey of 154 major employers conducted in July and August revealed 19,732 graduate positions. This is down from 21,427 last year.
Retail, construction, engineering and industrial positions have been hardest hit, with 16, 14 and 11 per cent fewer graduate positions respectively. By contrast, there is still growth in the I.T. and telecoms sectors.
Is this purely down to Brexit-related uncertainty? Or does it reflect a broader shift in focus from university graduates to school leavers? A renewed focus on apprenticeships, skills and training may make good quality college leavers more attractive than relatively expensive graduates.
Many degree holders find themselves doing jobs that are not commensurate with either their qualifications or their expectations. Perhaps the UK economy doesn’t need as many graduates as was once thought?
Instead, a focus on engineering and manufacturing may result in increased demand for skilled technical staff, and a renewed interest in apprenticeships and on the job training.
Britain’s youth have to make difficult choices at an early age. Do they go to university and build up a significant level of debt with the possibility of entering the professions? Or do they start earning and carry on learning in an apprenticeship?
If you had your time again, what would you choose?
About the author(s)
Ian is a London-based professional support lawyer (PSL) legal director. Ian is a member of our pensions and combined human resource solutions (CHRS) teams. He works with clients to solve their employment and pensions law issues. Ian maintains a particular focus on 'crossover' issues that benefit from his understanding of both areas of law.