Jun 20 2012
Plans to force companies to have binding votes on executive pay every three years are to be unveiled by Business Secretary Vince Cable.
His drive to make remuneration more transparent may also include a proposal for companies to reveal separate figures for each director showing rewards from past incentive schemes, current pay and potential future awards.
The moves come amid growing shareholder activism over executive pay, as shown by last week's rejection of WPP's remuneration report which included a £6.8 million pay deal for chief executive Sir Martin Sorrell.
Currently, shareholder votes are advisory, which means companies can ignore them.
Mr Cable, who will present his proposals to MPs, is said to have watered down his plans for the binding vote on pay, by requiring an investor poll every three years rather than annually, unless a company makes a material change to a director's deal.
He has also dropped a proposal that the binding pay vote must receive the backing of a super-majority of three-quarters of investors.
It had been feared that a binding annual vote would make investors less inclined to protest in case they destabilised management teams.
Shareholders have become more effective at exerting pressure on companies, with Aviva's Andrew Moss among the bosses who have been ousted in recent months.