This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
An independent report commissioned by Labour shadow chancellor John McDonnell and shadow business secretary Rebecca Long-Bailey suggests that staff and consumers should have more say over executive pay at the UK’s largest 7000 companies.
The report also calls for major UK corporations to for disclosures and revised remuneration approval practices to be introduced.
How does Labour wants to change executive pay?
The proposed reforms in the report call for increased transparency over pay and suggest that companies in the UK with more than 250 employees should reveal names of staff members who are paid more than £150,000 per year.
The report says that ‘the cult of bonus payments’ should be discouraged and that bonuses should only be paid to employees where the company can demonstrate that they have displayed an ‘extraordinary performance’.
The Labour party is also considering allowing ‘stakeholders’ the ability to vote before executive bonuses are approved, with the company requiring ‘support from at least 90% of all voting stakeholders to approve each item of bonus’.
The report also calls for a ban on golden handshakes and large-scale severance pay-outs, which it says have become a way of boosting executive pay and must be prohibited.