UK incorporated companies listed on the London Stock Exchange (SEDOL), New York Stock Exchange, NASDAQ or regulated stock exchanges in the European Economic Area with more than 250 employees in the UK must each year disclose and explain the ratio between their CEO's pay and the median, lower quartile and upper quartile pay of their UK employees. These requirements in the new Companies Act regulations are effective for accounting periods beginning on or after 1 Jan 2019. The first pay ratio reports are due in 2020, but the UK Investment Association is encouraging companies to “early adopt” after confirmation of the methodology. The regulations, together with the revised UK corporate governance code, aim to tackle excessive boardroom pay and improve transparency and accountability.
In the first reporting year, the directors' remuneration report must include:
In later years, the report must include the following information:
The regulations also require disclosure of the following:
A company's strategic report and directors’ report must also describe how directors have fulfilled their duty to promote the company's success. These disclosures must include the long-term impact of decisions on (i) the interests of the company’s employees and wider stakeholders (for example, suppliers, customers, the community and the environment); (ii) the maintenance of high standards of business conduct; and (iii) the duty to act fairly between members of the company.