Executive pay to be scrutinised
Business secretary Vince Cable has published a discussion paper into executive pay in a bid to ‘call time on pay outs for failure’.
The paper focuses on how to curb pay ‘asymmetry’, where increasing salaries at the top do not collate with company performance, value of shares and average employee pay.
Speaking at the Liberal Democrat Autumn Conference yesterday, Vince Cable said: “It is hard to explain why shareholders can vote to cut top pay but managers can ignore the vote.
“And surely pay should be transparent; not hidden from shareholders, and the public.”
The news comes as Cable also announced the launch of a consultation paper, which will seek to simplify the reporting requirements for companies, providing clear and relevant information to investors on performance and pay.
The consultation paper also seeks views on whether companies should be required to publish the number of women who sit on their boards and executive committees.
The discussion paper into executive remuneration also seeks to deliberate ways to empower shareholders and get them more involved in the running of companies.
Commenting, John Cridland, director general at the CBI said: “People should be rewarded for good work, and payment for failure is unacceptable, but it must be recognised that the jobs market for senior company executives is one where talent competes globally.
“We need shareholders to be more involved with the companies they invest in, and they should hold the board to account when it’s necessary. However, it is not the role of shareholders to micro-manage companies day-to-day.
“We welcome this consultation, but executive pay must not become a political football, and overly simplistic measures like ratios will not address the problem.”