Commenting on the discussion paper on executive remuneration by the Department for Business, which includes a proposal for employee representation on remuneration committees, TUC General Secretary Brendan Barber said:
‘The UK’s flawed executive pay culture has allowed those at the top to award themselves vast pay increases without any link to performance. This system contributed to the financial crash and needs urgent reform.
‘Workers’ representatives on remuneration committees will help regain public confidence in executive pay by adding a sense of perspective and forcing directors to explain how their rewards relate to those offered to their workforce.
‘But any attempt to seriously reform executive pay will be fiercely resisted by vested interests in the City – many of whom rely on the status quo for their own inflated salaries – and the government must be prepared to stand up to them.’
The CBI view on the announcement of a Government consultation on remuneration,
John Cridland, CBI Director-General, said:
“It is crucial that executive pay is squarely linked to performance, and there are cases where this link needs to be clearer.
“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.”