Hermes responds to the UK Government’s paper on corporate governance reform
Leon Kamhi, Head of Responsibility at Hermes Investment Management, comments on today’s publication, Corporate governance reform, by the UK Government:
“The additional measures proposed today by the Government look set to strengthen investors’ hand on pay, and it is now incumbent on both companies and us as investors to respond to the challenge of excessive executive remuneration."
“Whilst it is not a panacea and the appropriate ratio will differ from company to company, increased transparency provided by the publication of the CEO-to-median-employee pay ratio is to be welcomed as it puts pressure on boards to explain the rationale behind the level of executive remuneration and disparities in pay across the organisation."
“We strongly believe that boards of both public and private companies need to be more diverse and recognise the critical contribution that employees make to the success of every company. Whilst we would have liked the Government to go further and propose elected employees on boards, we are encouraged to see recognition for the clear benefits that are gleaned from greater employee voice in a company’s governance."