Top think-tank calls for new High Pay Commission to advise on boardroom pay

The government should set up a High Pay Commission to provide an independent source of advice on boardroom pay, a leading think-tank has suggested.

The Work Foundation said the pay review body, which would follow the same model as the Low Pay Commission, could set reliable salary benchmarks and make public recommendations on pay to company boards.

Membership of the new body could be tripartite, like that of the Low Pay Commission, which advises the government on the national minimum wage. Members are drawn from a range of employer, employee and academic backgrounds.

Levels of directors’ pay have become increasingly contentious in recent months. The Work Foundation paper said that, in the year to summer 2006, chief executive remuneration packages increased by 28%, against average wage increases across the whole economy of 4%.

Nick Isles, author of the paper, said the UK’s top companies had to start putting a brake on high salaries. “Growing pay inequality corrodes the basic concept of fair reward that underpins a thriving society,” he said.

TUC general secretary Brendan Barber has called for a national debate on directors’ pay. He said: “There is nothing wrong with people who have big responsibilities or who perform well getting more pay. But there is still a debate to be had about how big and how justified these extra rewards should be.”

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