British PM sets path for corporate governance reforms
In a speech on 11 July, launching her national campaign to become Leader of the Conservative Party and Prime Minister of the United Kingdom, Theresa May — now the current PM — set out a number of key corporate governance reforms she intends to introduce, including a binding, rather than advisory, vote on remuneration and consumer and employee representation on company boards.
Other proposed reforms include protection from takeovers for key British companies. Theresa May nominated Cadburys and AstraZeneca as two examples of stakeholders’ interests in companies needing to be taken into account when consideration is given to the sale of British companies to foreign ones, commenting that ‘transient shareholders — who are mostly companies investing other people’s money — are not the only people with an interest when firms are sold or close. Workers have a stake, local communities have a stake, and often the whole country has a stake’.
As well as proposing a binding vote on remuneration, the now current PM advised that greater transparency would be required, including disclosure of the ratio between the CEO’s remuneration and the average company worker’s pay and bonus targets.
Theresa May also proposed a crackdown on tax avoidance by companies, including multinationals operating in the UK. She noted that communities are of the view that corporations should pay for the many years of use of public infrastructure that assisted in building their industries. Accompanying this was a call to review competition law to assess if stricter regulation is required in relation to highly-consolidated markets.
In addressing what she called ‘corporate irresponsibility’, Theresa May noted that ‘It is not anti-business to suggest that big business needs to change. Better governance will help these companies to take better decisions, for their own long-term benefit and that of the economy overall’.