AAT members call for pay ratio introduction
07 March 2017
More than 90 per cent of AAT (Association of Accounting Technicians) members believe executive pay would be better controlled by the introduction of pay ratios.
The AAT Corporate Governance Survey 2017 was conducted to help inform AAT’s response to the Department for Business, Energy & Industrial Strategy (BEIS) Green Paper on Corporate Governance Reform. Executive pay is one of the key areas that the green paper asked for views on.
The survey revealed that just one in five (21%) AAT members believe government plans to introduce a legal requirement to publish pay ratios will have any impact. Instead of the simple publication of information, most AAT members would like to see a legally binding pay ratio requirement.
Support was strongest for a 20:1 pay ratio as previously proposed by both David Cameron and Jeremy Corbyn (40%) but there was also support for a 40:1 pay ratio (22%), a figure the High Pay Centre suggests companies should move towards, and a 75:1 pay ratio (10%) as adopted by the John Lewis Partnership.
No members backed a pay ratio of 150:1, the current average for FTSE 100 companies, while only seven per cent were in favour of having no pay ratio at all.
Adam Harper, AAT Director of Strategy and Professional Standards said:
“At a time of increasing wage inequality and growing distrust in corporate Britain, businesses and policy makers need to show that they are serious about reform.
Our member’s views on pay ratios are clear - pay ratio reporting should be an absolute minimum but is unlikely to deliver significant change. Instead, given the apparent failure of previous approaches, the time for a compulsory pay ratio appears to be moving ever closer.”
The full AAT Corporate Governance Reform consultation response can be accessed here.