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Governance

U.K. details governance reforms for executive pay

New registry to identify major opposition to compensation at FTSE-listed companies

Investors objecting to executive pay packages at listed companies will be given more support and enhanced transparency thanks to new corporate governance reforms announced by the U.K. government.

The government announced Tuesday that new reforms will force around 900 U.K. listed companies to publish the pay ratio between CEOs and their average U.K. employee.

Further, a world-first public register of listed companies facing significant shareholder opposition over executive pay will be launched. Listed companies with 20% shareholder opposition on executive pay packages will be named.

Companies named on the register, which will be launched by the end of the year, will detail how they intend to address investor concerns. The register is being created by the U.K.'s Investment Association, which represents money management firms.

"This first-ever register will help shareholders to publicly hold these companies to account," said Greg Clark, U.K. business secretary, in the government's announcement.

Investment Association CEO Chris Cummings said in a news release: "The creation of the public register on shareholder voting is an important step in increasing accountability and transparency of those listed companies that see significant shareholder rebellions during the (annual general meeting) season."

Mr. Cummings added that the register will "help sharpen the focus on those who must do more, enabling our members to hold the country's biggest businesses to account and leading to better-run companies."

The register will apply to companies in the FTSE All-Share index.

The government's new reforms will force all listed companies to reveal the pay ratio between bosses and workers, said its announcement. The new measures aim to ensure the employee voices are heard in the boardroom.

The move comes as the Pensions and Lifetime Savings Association published research showing 84% of pension funds are concerned about the pay gap in listed companies, with 86% believing executive pay is too high.

The PLSA conducted a survey of its members in the second half of last year, receiving responses from 53 pension funds. Results were published Tuesday.