The Department of Business, Innovation and Skills (BIS) has today launched an inquiry into corporate governance, scrutinising executive pay, director duties and the make-up of boardrooms.
BIS said the inquiry came as a result of failings highlighted by the recent high profile investigations in to BHS and Sports Direct and is part of Prime Minister’s Theresa May’s plan to overhaul corporate governance.
The committee will examine whether executive pay should be linked to a company’s performance and whether the current law is clear on the roles of directors and non-executive directors. It will also look at how to increase the number of women in executive roles and worker representation on boards.
Chair Iain Wright said: “Irresponsible business behaviour and poor corporate governance certainly act against the interests of workers, but they also act as a brake on long-term prosperity and profitability in companies, as well as tarnishing the reputation of business and undermining public trust in enterprise. We need to look again at the laws that govern business and how they are enforced. Good corporate governance shouldn’t be a hindrance to business; it can contribute to companies’ long-term prosperity and performance as well as showing to the world that a business is transparent, accountable and responsible.”
Simon Walker, director general of the Institute of Directors, added that the reputation of British business had failed to recover from the 2008 economic crisis.
“There are important questions that need to be addressed on issues including transparency, executive pay and board diversity. The Prime Minister has made clear that company boards are in her sights, so directors must fully engage in this debate.”
The deadline for written evidence is Wednesday 26 October 2016.