Outlining his proposals in Parliament, the Business Secretary put forward a four-pronged package. He aims to provide greater transparency, more shareholder power and diversity on boards, and calls for best practice.
Cable has taken steps to curb the level of executive pay following the response to the call for evidence he set out last year.
“We cannot continue to see top pay rising at five times that of average pay,” he said.
Although there were no unexpected measures, it is clear that shareholders will be given far more power. They will have a binding vote over how executive payments
are managed. In addition firms will need agreement from 75 per cent of shareholders over pay proposals.
Sean O’Hare, Remuneration Partner at PricewaterhouseCoopers, said: “This will force much greater engagement between corporates and shareholders, as no one will want the figures subject to vote to come as a surprise.”
Intentions to introduce a single remuneration figure have also been welcomed. However, O’Hare points out that due to complicated packages with varying timeframes producing a single figure may be problematic.
John Cridland, CBI Director-General, concluded: “It is encouraging that some of the heat has been taken out of this issue by Government coming up with some practical proposals.”