Overview

This bill amends the Companies Act 2006, requiring public quoted companies to disclose the ratio between the highest-paid director/executive's remuneration and the average remuneration of the lowest-paid 10% of their workforce. This ratio, along with the individual remuneration figures, must be prominently displayed in their annual reports.

Description

Key Provisions

The bill mandates that all public quoted companies must include the following information in their annual reports:

• The ratio between the highest-paid director or executive's total annual remuneration and the average annual remuneration of the lowest-paid 10% of their employees.
• The total annual remuneration of both the highest-paid director/executive and the average annual remuneration of the lowest-paid 10% of employees.

This information must be presented in bold type on the first page of the chairman’s, chief executive’s, or directors’ report and within the main body of the annual accounts. Remuneration includes all elements specified in Schedule 8 of the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008. Part-time or not fully employed individuals' remuneration will be calculated pro-rata. The requirement applies equally to electronic versions of the report.

Government Spending

The bill is not expected to directly impact government spending. The cost of compliance will fall on the companies themselves.

Groups Affected

The bill primarily affects:

• Public quoted companies: They are required to implement the new reporting requirements, potentially incurring costs associated with data gathering and reporting.
• Investors and shareholders: They will have access to more transparent information about pay disparities within companies, potentially influencing investment decisions.
• Employees: They will have greater visibility of the remuneration gap between the highest and lowest paid employees within their companies.

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