A new parliamentary investigation has been launched into corporate governance, executive pay, director duties and the make-up of boardrooms following high profile failings of BHS and Sports Direct.
The Department of Business, Innovation and Skills (BIS) has announced today that it would start a new inquiry into practices at the top tiers of businesses sparked by the failings of retail tycoons Mike Ashley and Sir Phillip Green.
Prime Minister Theresa May’s plan to overhaul corporate governance will examine whether executive pay should be linked to a company’s performance, and whether the law is clear on the roles of both directors and their non-executive counterparts.
It will also attempt to increase the number of women in the boardroom and worker representatives on boards.
Institute of Directors director general Simon Walker said the reputation of British business had failed to recover since the economic crash in 2008.
“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,” BIS chairman Ian Wright said.
“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.”