Deputy prime minister talks up the role of investors as he announces proposals to curb ‘excessive and irresponsible’ pay
The UK government is to set out proposals next month that could make it easier for shareholders to hold companies to account over executive pay.
On the BBC yesterday, Deputy Prime Minister Nick Clegg said proposals would be put forward to tackle ‘excessive and irresponsible’ pay awards.
The measures could include simplifying compensation disclosure and giving shareholders a binding vote on pay, Clegg indicated.
‘Shareholders should be given a proper say. They own the companies, after all,’ he said.
‘Far too often shareholders are given a blizzard of information they don't understand and they then don't have a binding say over what executives get paid.’
The announcement follows research showing that FSTE 100 directors received pay increases averaging 49 percent last year.
Clegg called the finding a ‘real slap in the face for millions of people in this country who are struggling to make ends meet’.
The deputy prime minister said other ways to tackle excessive pay could include widening the membership of remuneration committees, for example to include workers, although nothing has been decided for definite.
Pay consultation
The proposals will build on the findings of a consultation run by business secretary Vince Cable into executive pay that closed on November 25.
The consultation floated the idea of a binding vote on pay, but also acknowledged that many shareholders and other stakeholders view a binding vote as a bad idea.
Advocates for more accountability over pay received a boost last Friday when it was reported that the UK’s Lloyds Banking Group is considering clawing back half of former CEO Eric Daniels’ £1.45 mn ($2.3 mn) bonus for 2010.
After Daniels left, Lloyds took a £3.2 bn charge to cover compensation for customers who were mis-sold payment protection insurance.
