Executive pay should be capped, says UK parliament report

LONDON, March 26 (Xinhua) -- A cap should be applied on total remuneration for top bosses of FTSE 100 companies, a UK parliament report said on Tuesday, in a move to tackle the notorious excessive executive pay problem.

Referencing "shaming" executive pay decisions at Persimmon, Royal Mail and Unilever, the report blamed that "huge differentials" in bosses' pay are "baked into the pay system" due to weak remuneration committees and corporate greed.

The report by the Business, Energy and Industrial Strategy Committee said earnings of FTSE 100 CEOs over the last decade have increased four times as much as national average earnings, bringing into a sharp contrast of the bosses' 4-million-pound annual pay and average worker's less than 30,000-pound income.

The report recommended measures to narrow pay gaps and deliver fairer rewards across businesses, calling on businesses to move executive pay structures away from unpredictable and excessive bonuses, with a greater element based on fixed basic salary plus deferred shares.

It proposes a stronger link between executive and employee pay, recommending businesses make greater use of profit-sharing schemes, and appoint at least one employee representative to their remuneration committee.

Rachel Reeves, chair of the committee, said: "Eye-watering and unjustified CEO pay packages are corrosive of trust in business and threaten to undermine the public's support for the way our economy operates."

"When a company does well, it is workers and not just the chief executive who should share the profits...Getting workers on remuneration committees and including staff in profit-sharing schemes should be the first steps to this end," Reeves said.

Reeves added that public scrutiny, which has often had more influence than investors or remuneration committees, also has a role to play in getting companies to reverse outrageous executive pay decisions.(one pound currently equals to 1.32 U.S. dollars)