The Government has published proposals for the largest UK banks to reveal anonymous remuneration details for 8 "top" earners.
Those banks affected are UK banks or UK branches of non-EEA banks with attributable assets of over £50 billion. UK branches of non-EEA banks are excluded (because to include them would infringe EU home state regulation principles). The Government estimates about 15 banks will be affected.
Those employees affected are the highest earning 8 employees in "managerial" positions. UK quoted company directors are excluded from being one of the 8 individuals on the basis that their pay is already reported, hence the proposals being described as affecting "below the board" pay. As employees without managerial responsibilities are therefore not caught by the proposals, defining responsibilities will clearly lead to a sensitive dividing line in some cases and even a disincentive to take on managerial responsibilities. Disclosure is required only to be made on an anonymous basis, but given the need for UK quoted companies to report share awards for PDMRs on a named basis under their listing obligations, it could be easy to match supposed anonymous disclosure under one regime with a named disclosure under another.
The proposals are subject to consultation until 14 February 2012. If implemented in their current form (which is expected), the first disclosure is for the first year beginning on or after 1 January 2011. This must be made by 31 December 2012. Later disclosures are required to be made in accordance with normal accounting deadlines.
Before the General Election in 2010, the Labour Government published some much broader disclosure proposals requiring additional discussion of underlying policy etc ( click here to see our earlier Law-Now) and so it is welcome that the December 2011 proposals are limited to pay data disclosure - amount of fixed and variable pay for the year etc - which is hardly onerous given the scale of regulatory pay demands now made of these institutions. Disclosure of senior company pay below board level on an anonymous basis is part of the Vince Cable listed company discussion points published a few months ago ( click here to see our Law-Now on this subject), and so disclosure of below board level pay now seems to be an emerging theme across Government.
However, whether public disclosure of pay details actually supports a better risk environment (the supposed motivation behind these proposals) remains highly debatable.
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The original publication date for this article was 12/12/2011.