In response to the publication of the Government’s green paper on corporate governance, Simon Walker, Director General at the Institute of Directors, said:

“We are very pleased the Government is kicking off a wide debate on how to ensure UK corporate governance is up to scratch. Ministers are taking a genuinely consultative approach, putting forward a pragmatic list of options to increase shareholder input in directors’ pay and give employees a greater voice in the boardroom, both of which can help towards the long-term success of companies.

“The most important element of the proposals is greater scrutiny for unlisted companies, which is long overdue. There are around 2,500 private firms which employ at least 1,000 people, and the damage that occurs when they are poorly governed can be substantial, as we saw with the collapse of BHS. The IoD welcomes the suggestion to introduce a governance code for unlisted companies, having produced the first UK guidance for these companies in 2010.”

“We support the Government’s aim to give workers a bigger say, in particular in how directors’ pay is set. Greater consultation from the committee which sets pay, and putting a designated non-executive director in charge of getting employee feedback are both positive proposals. Making companies publish the ratio of CEO to employee pay might focus the board’s mind, but it isn’t a silver bullet. Banks would likely perform better on this measure than supermarkets, but that tells you little about how the company is governed.”

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