The High Pay Commission was an independent inquiry established by Compass with the support of the Joseph Rowntree Charitable Trust to look into high pay and boardroom pay across the public and private sectors
At the end of 2011, the Commission made 12 key recommendations in its final report, many of which mirror those raised in a consultation paper published by the Department for Business and Innovation Skills (for more information on the consultation paper, please click here).
The High Pay Commission's recommendations
- Executives should be paid a basic salary, with remuneration committees electing to award one additional performance related element only where it is deemed necessary in the long term interests of the company.
- An anonymised list of their top 10 highest paid employees outside the boardroom should be published.
- Remuneration reports should be presented in a standardised format, incorporating and moving beyond best practice. As part of this the Commission recommends that all companies publish a figure for the total remuneration package received by each executive and a methodology for how it has been calculated.
- All investment fund managers should fully disclose how they vote on all issues including those of remuneration.
- Employees should be represented on remuneration committees as a first step to better engagement and accountability.
- All publicly listed companies should annually publish a statement of the distribution of income over a period of three years, showing the percentage changes in: total staff costs; company reinvestment; shareholder dividends; executive team total package and tax paid.
- Shareholders should cast forward looking advisory votes on remuneration reports - votes on remuneration should be cast on remuneration arrangements for three years following the date of the vote and these arrangements should include future salary increases, bonus packages and all hidden benefits, giving shareholders a genuine say in the remuneration of executives.
- Companies should invest in the talent pipeline - they should implement a defined and structured talent pipeline to ensure suitable and qualified successors are promoted from within the company where possible.
- Recruitment of non-executives should be openly and publicly advertised, making remuneration committees open to a wider group, encouraging diversity and ending the closed shop culture of appointments.
- Conflicts of interest of remuneration consultants should be reduced - companies should publish the extent and nature of all the services provided by remuneration consultants acknowledging this is only the first step if cross selling is seen to continue.
- All publicly listed companies should publish fair pay reports as part of their remuneration reports to build trust in pay policies.
- A permanent body should be established to monitor high pay - the Commission recommends this body is established on a social partnership basis, much like the Low Pay
Commission by government to: monitor pay trends at the top of the income distribution; police pay codes in UK companies; ensure company legislation is effective in ensuring transparency accountability and fairness in pay at the top of British Companies and report annually to government and the public on high pay.
Pay at the top of UK companies continues to attract a great deal of public attention, and the Government is expected to announce measures to address the issue soon.
Early indications are that the bar for reform will be set quite high.