SOME of the biggest holders of U.K. stocks plan to get tougher on executive pay, as the government turns up the heat over the yawning income gap between bosses and employees following Britons’ vote to leave the European Union.

    Doubts remain over whether shareholders will force through many major changes. Nevertheless, three of the five biggest investors in companies on the FTSE 350 index have set out fresh guidance on setting top pay, or say they plan to do so before votes at annual general meetings (AGMs) this spring.

    Fund managers typically worry about how incentive schemes will encourage executives to achieve better returns for shareholders, and not necessarily about the amount the bosses take home — the often startling sums which grab media headlines.

    So far, investors have had little public success in forcing company boards to change executive pay arrangements by accepting their guidance, and often their complaints about excessive handouts have fallen on deaf ears.

    But now, with Prime Minister Theresa May championing those Britons who are struggling to get by, more is at stake.

    The fund arm of insurer Legal & General, the number two investor in FTSE 350 stocks, issued new guidance last autumn and says it won’t be alone in holding firms to greater account.

    “We believe more scrutiny will arise both for companies and investors in the 2017 AGM season,” said Sacha Sadan, Legal and General Investment Management’s director of Corporate Governance.

    “This is due to a combination of social, political and financial pressure on companies to address the widening differential between executive teams and employees,” he said.

    According to the High Pay Center, a campaign group, the median annual pay of bosses at the 100 biggest London-listed companies stands at just under 4 million pounds (US$5 million).

    It declared Jan. 4 as “Fat Cat Wednesday 2017”, estimating that by midday, chief executives had already earned more than the average British worker will make all year: 28,200 pounds.

    Criticism of “Fat Cats” goes back decades but last June’s EU referendum exposed a deep divide between those at the top of corporate and political life, and the wider public.

    Highlighting this resentment, May has proposed reforms to curb excessive pay and improve accountability to shareholders. “It is essential for business to demonstrate leadership — to show that, in this globalized world, everyone is playing by the same rules, and that the benefits of economic success are there for all our citizens,” she told the World Economic Forum in Davos last week.

    U.S. fund manager Blackrock, which holds around US$1.6 trillion of U.K. stocks and is the biggest investor in the FTSE 350, warned last week it would vote against boards which failed to meet its new guidelines on pay policy. (SD-Agencies)