The Business, Innovation and Skills (BIS) select committee has announced it will be leading an inquiry into the excess corporate pay in UK businesses.
BIS has been particularly active recently, fronting government investigations into the working conditions at Sports Direct and the collapse of BHS.
Ian Wright, MP for Hartlepool and chair of the BIS said: “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. We need to look again at the laws that govern business and how they are enforced.
“We are also keen to explore the issue of ever growing pay increases to executives, especially when there often seems to be very little connection with company performance or any pay rises to the vast majority of employees.”
The investigation will also look at diversity in corporate boardrooms. Last month, research by the Equality and Human Rights Commission found that only 5% of FTSE 100 board members were from ethnic minorities.
Evidence will be collated from the testimonies of shareholders, employers’ bodies and campaigners for institutional change.
The announcement has been welcomed by senior figures at the Institute of Directors and the Trade Unions Congress (TUC).
Frances O’Grady, TUC general secretary said: “Poor corporate governance contributes to high profile corporate disasters, such as BHS, but also to short-termism and excessive executive pay across much of the sector. This inquiry is important and timely.”