Green Paper on Corporate Governance reform

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The Government has published a Green Paper on corporate governance reform. It focuses on three specific aspects of corporate governance where it believes there is scope to enhance the current framework:

  • Executive pay – The Green Paper asks for views on a range of options for strengthening shareholder influence over directors’ remuneration, increasing transparency and simplifying and strengthening long-term incentive plans. The Government’s objective is to achieve executive pay that is long term, fair, transparent and related to performance.
  • Employee and customer voice – The Green Paper examines approaches to strengthening the employee, customer and wider stakeholder voice in the boardroom. Four options are under consideration as follows:
    • Creating stakeholder advisory panels.
    • Designating existing non-executive directors to ensure that the voices of key interested groups, especially that of employees, is being heard at board level.
    • Appointing individual stakeholder representatives to company boards.
    • Strengthening reporting requirements related to stakeholder engagement.

In November, Theresa May retreated from the Government’s previous suggestion of appointing workers on boards in her speech at the Confederation of British Industry (CBI) Annual Conference.

The deadline for responding to the Green Paper is 17 February 2017. This runs alongside the ongoing Corporate Governance Inquiry.

If you would like further advice on this topic please contact David Smedley or Andrew Rayment.