MPs launch investigation into executive pay

The Business, Innovation and Skills Committee has launched an inquiry into corporate governance, with a specific focus on executive pay, worker representation in the boardroom and the lack of women in senior positions.

BP, WPP and Smith and Nephew have been among the big companies where investors have revolted against boardroom pay.

The news comes after BP chief executive Bob Dudley received a pay rise worth £14 million, despite shareholders voting against the increase.

The group of MPs will examine the factors which have led to a rapid rise in executive pay over the past 30 years, in comparison with the salaries of more junior employees.

A recent study by the High Pay Centre found that chief executives were paid an average of 140 times more than their employees. It also highlighted that there were no women in the top 10 highest paid chief executives.

Iain Wright, chair of the committee, said: "We on the committee are also keen to explore the issue of ever growing pay increases to executives, especially when there often seems to be very little connection with company performance or any pay rises to the vast majority of employees.

"While there has been some recent shareholder actions against these ever larger pay packages, can we have any confidence that the current framework for controlling pay is working?

"As a committee, we will want to look at whether executive pay should take account of companies' long-term performance and whether the government should intervene further to control executive pay.”

Frances O'Grady, UC general secretary, said: "Poor corporate governance contributes not only to high profile corporate disasters such as BHS, but also to short-termism and excessive executive pay across much of the private sector.

"This inquiry is important and timely and the TUC welcomes the opportunity to contribute to the committee's discussions."