Shareholders might get greater say in companies’ remuneration policies

Business Secretary Vince Cable is expected to set out plans today that give shareholders and employees a greater say in salaries and bonuses for the leaders of public companies.

Explanations from remuneration committees justifying excessive pay deals without any great performance should be added to annual company reports. Cable hopes that this will give a better picture of executives’ pay, including all the perks in the form of expenses bonuses and pensions.

Cable told the Telegraph: “What we want to do is reward success in business. We want entrepreneurs to succeed, be properly rewarded, risk-takers, inward investment. What we do not want is rewards for failure, and the pattern over the last decade or so has been that there has been a massive increase in executive pay, management pay – 400% over a decade at a time when share prices for the owners have not increased at all and basic pay has not increased.”

FairPensions has welcomed Cable’s plans to give shareholders a binding vote on companies’ remuneration policies.

Director of engagement Louise Rouse said: “The general public and many shareholders are increasingly concerned about excessive boardroom pay but often feel powerless to bring about change. A legally binding right to block excessive pay would represent a welcome empowerment of shareholders.

“Most remuneration policies still receive the support of the majority of shareholders. The introduction of a binding vote would bring with it an implicit challenge to shareholders to call time on excessive remuneration.”

It is expected that the new rules will come into force in October 2012.

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