“Name and shame” has been selected as the tool of choice in the Government’s attempts to tackle corporate excess.
The package of measures falls short of Prime Minister Theresa May’s pledge, during her leadership campaign, “to have not just consumers represented on boards, but workers as well”.
The shortfall between the promise and the delivery has prompted critics in the unions and opposition to dismiss the measures as “feeble”.
As part of the Corporate Governance measures, unveiled by Business Secretary Greg Clark, more than 900 listed firms will be forced to reveal the pay ratio between bosses and workers.
Firms with significant shareholder opposition to executive pay packages will be named on a public register.
And workers will be represented by a non-executive director, rather than have a seat on the board. Alternatively, firms can create an employee advisory council.
Business groups have broadly welcomed the package but TUC general secretary Frances O’Grady said: “It’s a feeble proposal, spelling business as usual for boardrooms across Britain.
“The Prime Minister’s pledge to put workers on company boards has been watered down beyond all recognition.”
Executive director of the corporate governance and reporting division of the Financial Reporting Council Paul George admitted the worker representative proposals was “different to what has been promised”.
But he told BBC Radio 4’s Today: “You need to wait before you conclude on whether they are feeble or not in terms of what the combination of the package that the Government has put forward this morning plus how the FRC and others will take that forward.”
He added: “The board as a whole rather than individual directors having a responsibility to explain how they had regard for broader stakeholders in their key decisions will have an impact and is likely to have a better impact than having some form of tokenism in terms of representation.”
Mr Clark said the measures would “ensure our largest companies are more transparent and accountable to their employees and shareholders”.
CBI president Paul Drechsler said: “Providing shareholders with a ‘say on pay’ has been an effective tool and a public register will help to shine a light on the small minority of cases that warrant greater attention.”
Shadow business secretary Rebecca Long-Bailey said: “These proposals are just more crony capitalism from the Tories, who once again prop up the rigged system for the few at the expense of the many.”
Liberal Democrat leader, and former business secretary, Sir Vince Cable dismissed the Government’s approach as “strong on rhetoric, weak on action”.
He said: “The new corporate governance code for large private companies – such as BHS– is voluntary and therefore likely to have little effect.”