Theresa May to Be Appointed New U.K. Prime Minister

Corporate governance changes are among the policy flagships unveiled by the successor to David Cameron.
By Lisa Botter ,

Theresa May will later today formally be named the U.K.'s new prime minister after weeks of political wrangling following the U.K.'s vote to leave the European Union.

May, the country's second female prime minister, is expected to almost immediately fill a number of positions with women to create a more gender-balanced cabinet.

May was most recently the home secretary in her predecessor David Cameron's government. Cameron resigned after the Brexit vote.

The FTSE 100  was recently narrowly up at 6,683.64  after gaining on Monday when May's imminent coronation as prime minister became apparent. 

May became the prime-minister-in-waiting when on Monday her rival to lead the U.K.'s Conservative Party, Andrea Leadsom, dropped out of the race in a shock move. Rather than a nine-week battle for the Conservative Party leader, May was given little more than 48 hours to prepare to lead the country.

May takes on a country divided. A slight majority of the population voted to leave the EU, leaving many of those who voted "remain" shocked and bitter. Some have taken to the streets and signed petitions to overturn to the decision.

Markets have also been in turmoil since the vote, with the pound hovering at 31-year low, commercial property under strain and government bonds yields sinking to new lows.

The Bank of England tomorrow is widely expected to cut interest rates and will likely introduce more monetary easing throughout the summer.

May's views on the economy, however, are not widely known.

The new prime minister will oversee the U.K.'s divorce from the EU. Although May backed the remain campaign, on Monday she said that "Brexit means Brexit."

A big question hanging over May's head is when she will invoke Article 50 of the EU's governing treaty, and thus formally start the process of the U.K. extracting itself from the bloc.

In a speech made on Monday before Leadsom dropped out of the race, May said, "There will be no attempts to remain inside the EU, no attempts to rejoin it by the back door, and no second referendum. The country voted to leave the European Union, and as Prime Minister I will make sure that we leave the European Union."

May will be charged with appointing a so-called Brexit Czar to head up the government's new Brexit department. Her office on Tuesday said this would be one of her first announcements.

The new prime minister also laid out her vision on how U.K. companies should be governed. She said that the government should be given more powers when foreign suitors looks at British companies, referring to Kraft's takeover of Cadbury and Pfizer's (PFE) - Get Report bid for AstraZeneca (AZN) - Get Report .

"A proper industrial strategy wouldn't automatically stop the sale of British firms to foreign ones, but it should be capable of stepping in to defend a sector that is as important as pharmaceuticals is to Britain," she said.

May also called into question U.K. corporate governance, saying that big businesses should be accountable to outsiders and non-executive directors. However, many directors are drawn from the "same, narrow social and professional circles as the executive team... and the scrutiny they provide is just not enough," she said.

May added that when she was prime minister that consumers and employees would be represented on company boards.

She also said that she wants to make the vote on executive compensation binding and increase transparency on executive pay by introducing a metric that would show the ratio between the CEO's pay and that of the average worker.

May said, "I want to simplify the way bonuses are paid so that the bosses' incentives are better aligned with the long-term interests of the company and its shareholders."

It is expected that May's change to the way big business is run in the U.K. will fall to the bottom of the list, as Brexit will be front and center for much of her tenure.

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