The UK's top accounting regulator today publishes a "shorter, sharper" corporate governance code that aligns the pay of top execs and workers.
Proposals by the Financial Reporting Council (FRC) were welcomed by leading HR and governance bodies.
The code includes requirements for UK firms to ensure board appointments are "based on merit" rather than "group think". It also proposes giving pay committees broader responsibility and discretion over exec remuneration and is more specific on what steps need to be taken when companies encounter significant shareholder opposition.
FRC chair Sir Win Bischoff said the proposals "will be essential to restoring trust in business, attracting investment and ensuring the long-term success of companies for members and wider society".
The chief executive of governance institute ICSA Simon Osborne said companies should not "make the mistake of overlooking the essentials".
He added: "While there will no doubt be much debate on the detail, we strongly support the FRC’s aim of trimming back the code."
HR professional body the CIPD said the new code was a "welcome move".
CIPD chief executive Peter Cheese said:
The proposals place a much greater focus on organisational culture and employee voice, meaning that company boards will need to invest more time and thought on strategic workforce issues than ever before. This is a significant step forward in recognising the value of the workforce and the need for its voice to be heard at board level.