Theresa May should ignore objections to publishing pay ratios | Nils Pratley

Disclosing the difference between the chief executive's pay and a company's median earner is a modest proposal whose time has come

Executive pay reforms do not come much more modest than the idea of requiring public companies to say how much the chief executive is paid relative to the firm's median earner. Nothing would have to happen as a consequence. Shareholders would not be asked formally if the ratio is too high or too low. The boss's pay would not have to be capped at a fixed multiple. Instead, the hope is that boards, occasionally, might be embarrassed into exercising a little discipline.

Yet even this gentle proposal, likely to be included in the government's green paper on corporate governance on Tuesday, is running into resistance. Pay ratios are too crude and could mislead, runs one argument, because an investment bank, where lots of people tend to earn megabucks, could seem to be a "fairer" employer than a supermarket chain employing tens of thousands of shelf-stackers and checkout assistants. Worse, pay ratios could prove inflationary if bosses demand a higher place in a theoretical league table, runs another objection.