An influential committee of MPs has criticised the government for its failure to curb “extravagant” boardroom pay packages.

In a report in March, the business, energy and industrial strategy (BEIS) committee argued companies must do more to link leading executives’ pay to that of the rest of their workforce.

In her response, Kelly Tolhurst, the minister for small business, consumers and corporate responsibility, said: “Our immediate priority is to focus on the effective implementation and then assessment of these reforms before considering any significant further changes.”

She noted public companies now have to disclose and explain the ratio of their chief executive’s annual remuneration to the average pay of staff, while the Investment Association has set up a public register of shareholder revolts over pay.

However, Rachel Reeves, the Labour MP who chairs the committee, said: “The government’s response to our report on executive pay represents a missed opportunity to rein in bosses’ pay and link CEO pay to that of the rest of their workforce.

“The public are rightly appalled by extravagant CEO pay packages. The success of a business is rarely solely down to the chief executive and there should be greater efforts to ensure that workers have a share in the profits too.”

MPs argue a series of “shaming” decisions – including the attempt by the housebuilder Persimmon to pay its former chief executive Jeff Fairburn a bonus of £110m – have shown the need for stricter limits on executive pay.

The BEIS committee has called for greater use of profit-sharing schemes, a reduction of “variable pay” bonuses over time, an absolute cap on chief executives’ remuneration and giving employees a say in how their senior executives are paid.

Reeves said: “It’s disappointing the government has chosen to reject our recommendation that workers should sit on company pay committees. The appointment of a worker would bring some much-needed scepticism, challenge and perspective on executive rewards and help to curb some of the extravagant CEO pay packages we have seen in recent years.”

The government said several companies were already inviting employee representatives to attend at least one remuneration committee meeting a year. It added that the huge variety of companies meant “one method will not suit all”.

Theresa May vowed to put worker representatives on the boards of major companies when she campaigned to become prime minister in 2016, but the plan was ditched last year after lobbying from the CBI.

The government also said in its response to the committee’s report that remuneration committees and shareholders should decide on an absolute cap on total pay, with shareholders having a say through the binding vote on executive pay policies every three years.

It rejected MPs’ recommendation to extend pay ratio reporting to all employers with more than 250 staff and to include the lowest pay band, saying it “intends to monitor the impact” before considering extending pay ratio reporting.