With effect from January 2019 companies employing more than 250 employees are required to publish and justify the difference between their executive pay and the average wage of its UK workforce. Companies need to disclose the ratio of their CEO’s pay to the median, lower quartile and upper quartile pay on an annual basis. The first of these reports must be published in 2020, covering pay awarded in 2019.
The new laws also require all large companies to report on how their directors take employee and other stakeholder interests into account and require large private companies to report on their corporate governance arrangements.
Alongside the pay ratio reporting will be a new statutory duty on companies to set out the impact of share price growth on executive pay outcomes.