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Executives at UK-listed companies would be required to hold on to bonuses paid as shares for at least five years under far-reaching revisions to Britain’s corporate governance code aimed at restoring public trust in business.

The proposals also call on company boards to consider ethnic and social diversity when choosing their members and tighten the definition of an independent chairman to exclude those who have served more than nine years on the board.

The code, which is administered by the Financial Reporting Council, is not mandatory but most listed UK companies comply rather than exercising their option to explain why they are not doing so.

The bonus proposals come amid growing criticism of the gulf between highly paid chief executives and their mainstream workers, with the chiefs of Britain’s largest 100 listed companies earning 160 times more on average than the typical worker.

They will affect roughly a third of Britain’s 100 largest listed companies — those that currently do not have five-year holding periods. Stefan Stern, director of the High Pay Centre, which tracks chief executive pay, said the change was a “step in the right direction”.

But he added: “We should not be under the illusion that five years represents the long term — 10 would be better.”

The revisions also encourage boardrooms to evaluate whether pay for the wider workforce — including contractors and outsourced staff — is fair; and whether executive bonuses truly reflect company performance.

Paul George, the FRC’s executive director of corporate governance, said the revised code would enable remuneration committees to reject pay packages when a company’s performance had been falsely buoyed by currency movements or other factors that had nothing to do with the “skill and success of the executives”.

“We believe this should restore some trust [in business] if companies respond in the way we expect them to,” he said.

The FRC has given the public until the end of February to comment on its plans and will publish a final version in June.

Win Bischoff, chairman of the FRC, said: “At this critical time and as the country approaches Brexit, a revised code will be essential to restoring trust in business, attracting investment and ensuring the long-term success of companies for members and wider society.”

The revised code additionally requires boards to establish a mechanism to gather views from the workforce, which could include putting an employee on the board, setting up a formal workforce advisory panel, or assigning a non-executive director to liaise with staff.

A new set of principles outlined in the code also states that companies should “promote the long-term sustainable success of the company, generate value for shareholders and contribute to wider society”.

Richard Buxton, chief executive of Old Mutual Global Investors, said this measure was “terrific”, adding: “This makes it clear that generating value for shareholders is not the sole raison d’être [for companies] but equal to contributing to wider society. This is radical and a good thing.”

Sarah Wilson, chief executive of Manifest, which advises shareholders on governance issues, said: “Bringing the workforce and other stakeholders more formally into the governance framework will undoubtedly be a shock for some. Trust in business and investment is much too low and this needs to change.”

The addition of social and ethnic diversity as criteria for nomination committees to consider comes after the government’s Parker review last year found that more than half of FTSE 100 companies had all-white boards.

An additional 450 smaller listed companies that were previously exempt from much of the code will now have to comply with all of the provisions or explain why they are not doing it.

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