Peter Nicholls/Reuters
Britain's Secretary of State for Business Greg Clark arrives in Downing Street for a cabinet meeting, in London, November 15, 2016.
The proposal is one of many policies that May wants to pass as part of her promise to clean-up Britain's corporate sector and make it more transparent.
Business Secretary Greg Clark announced the government's plan in the House of Commons on Tuesday afternoon. The MP for Tunbridge Wells told MPs that he wanted to improve the public's trust in the private sector.
"This government is unequivocally and unashamedly pro-business, but we hold business to a high standard in doing so," Clark told parliament this afternoon.
"Executive pay has grown much faster over the last two decades than pay generally and at times is not in line with corporate performance."
The government's announcement comes a week after the Institute for Fiscal Studies warned that UK workers face an "extraordinary and dreadful income crisis" with earning growth set to be at its worst level for 70 years.
May had initially promised to make corporations more accountable by making it compulsory for workers to be represented on company boards. However, the prime minister recently backed down on this pledge, saying companies will simply be encouraged to do so.
Responding to Clark's announcement, Shadow Business Secretary Clive Lewis said described the government's plans to clean up corporate governance are "not good enough."
The MP for Norwich South said: "Sadly, this Green Paper looks like offering tokenism rather than a much-needed call to action.
"The real test has to be whether these proposals would have saved jobs and pensions at BHS or prevented the gross mistreatment of staff at Sports Direct, and whether they'll tackle the scourge of low pay and escalated executive pay. Anything that falls short of doing that is just not good enough."
The announcement was poorly attended by Labour MPs, though, with just a handful of opposition MPs present in the lower chamber to hear Clark speak.