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Britain's incoming PM: Tough stance on Brexit, bonuses and employee representation


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Britain's incoming PM: Tough stance on Brexit, bonuses and employee representation

Themarkets — and the British press— welcomed the announcement that Theresa May will become Britain's newprime minister, but executives of banks and other companies might be less keenon her plans to put staff representatives in boardrooms and give shareholdersthe right to block bonuses.

Sterlingrose by about 1.5 cents against the euro and nearly 2.5 cents against thedollar, to about €1.18 and $1.32, respectively, in the 24 hours after it becameclear at around noon London time on July 11 that May, the U.K.'s homesecretary, would succeed David Cameron. Her move into 10 Downing Street is nowexpected for July 13, but just a few hours before it transpired that herappointment as PM was imminent she gave a campaign speech that highlighted somekey policies of a politician who TheGuardian deemed "a known unknown."

'Brexit means Brexit'

Themost pressing issue May will have to deal with is . Somewhat ironically, given thatshe supported the Remain camp in the run-up to Britain's EU referendum, shewill now be charged with leading the U.K. out of the union.

DavidCameron has notinitiated formal exit negotiations, and high-profile Brexit campaigners BorisJohnson and Nigel Farage have stood aside following . Some high-profile financialfigures have suggested Brexit may not happen, with CEO Jamie Dimonraisingthe possibility of the Leave vote being reversed, according to Italy's Il Sole 24 Ore, and Austrian FinanceMinister Hans Jörg Schelling tellingGermany's Handelsblatt that the U.K.would end up staying in the EU.

Yetin her speech, May said "Brexit means Brexit" and denouncedpoliticians "who suggest the government should find a way of ignoring thereferendum result."

"Therewill be no attempts to remain inside the EU, no attempts to rejoin it by theback door, and no second referendum," she said.

Thisleaves the question about what kind of balance May — who is generally perceivedas taking a hard stance on immigration and who has not ruled out that EUcitizens living in the U.K. may be deported— wants to strike between the U.K. retaining access to the EU's single marketand restricting the movement of the bloc's citizens. In a July 11 opinionpiece, the Financial Times said shehas not yet indicated her solution to this conundrum, and highlighted that Maywould not trigger Article 50 of the Lisbon Treaty — which is the starting pointfor the official exit negotiations — until early 2017.

Changes to business governance

Mayaims to deliver "serious social reform" that would mean getting"tough on irresponsible behavior in big business," shesaid during her July 11 speech. "I want to see changes in the way that bigbusiness is governed."

Herplans envision employees being represented on company boards because thescrutiny nonexecutive directors currently provide "is just not goodenough" due to the fact that they are drawn from "the same, narrowsocial and professional circles as the executive team."

Inaddition, May — who started her career at the and also worked forthe Association for Payment Clearing Services, the precursor of the UK PaymentsAdministration, which supports payment systems such as Bacs and CHAPS — wantsto reduce the "irrational, unhealthy and growing gap between what [big]companies pay their workers and what they pay their bosses."

Tothis end, shareholder votes on corporate pay should become binding rather thanjust advisory, she said, adding that she wants bosses' bonuses to be"better aligned with the long-term interests of the company and itsshareholders."

Suchmeasures do not go against the ethos of the Conservatives as "the party ofenterprise," May said; they merely show the party is opposed to an"anything goes" mentality.

Mayalso said July 11 that her government would "do something" about"retail banks [that] are abusing their roles in highly consolidatedmarkets" and reminded big corporations of their responsibility to paytaxes.

"Asprime minister, I will crack down on individual and corporate tax avoidance andevasion," she said.

Buther apparently tough stance on big businesses comes together with a votingrecord that may actually indicate a bias toward them, The Independent said July 11. According to the newspaper's report,she opposed a 2011 proposal to use bankers' bonuses to create jobs for youngpeople, while as recently as April she vetoed several proposals that wereintended to crack down on tax evasion and avoidance.