Prime Minister Theresa May is readying a plan to give shareholders legal rights to block excessive pay packages - The Sunday Times reports.
Seemingly making good on promises to create an economy that “works for everyone”, the government is currently creating a white paper on corporate governance – expected to include measures that will force companies to respond to protest votes on executive pay.
As it stands, these votes are advisory and can be ignored.
The Investment Association has warned companies about overly complex pay deals and pay-outs not linked to performance.
Chris Cummings, IA Chief Executive, said: “As the starting gun is fired on this year’s AGM season, businesses around the UK would do well to heed the lessons from Brexit. Too many people still feel they are not sharing in this country’s prosperity.
“Companies can either act responsibly now and shape a more responsible 21st-century corporate Britain or they can carry on as before and have it foisted upon them.”
Recently, stockholders at Imperial Brands recently blocked a payrise for their CEO.
Alison Cooper – Chief Executive of the maker of Gauloises and John Player & Sons cigarettes – found out that her salary would not be voted on, effectively ending the possibility of her pay increasing from £5.5million a year to a potential £8.5million a year.
The non-vote demonstrates that the cigarette giant did not expect to win support from investors for any increase in pay.
Jeremy Corbyn has previously outlined his desire to curb excessive boardroom pay.
Although Corbyn has not gone as far as backing a maximum wage limit, he has voiced concerns about the widening pay ratios that exists between executives and ordinary staff members.
The BBC reports that he said: "This is not about limiting aspiration or penalising success. It is about recognising that success is a collective effort and rewards must be shared.
"We cannot have the CEO paying less tax than the cleaner… and pretending they are worth thousands of times more than the lowest paid staff."
Corbyn is not alone in his wishes to stifle soaring C-Suite pay-packets. Politicians, on both sides of the political divide, have gone public with their concerns about executive salaries.
Chris Philp, Conservative MP for Croydon South, has previously blamed shareholders themselves for the level of Boardroom pay packets.
Philp said: “Shareholders are not engaged and are frankly being a bit lazy. They are not active, energetic custodians of their own capital. A symptom of that is out-of-control executive pay – not just high amounts but also lack of alignment between pay and performance.”
If the government’s White Paper becomes UK legislation it would force firms to re-examine packages and hold a second shareholder meeting if an executive bonus package, pension payment or long-term incentive scheme fails to gain enough support.