Moves to manage top pay criticised
The Government has announced moves aimed at tackling the growing controversy over excessive boardroom pay, with proposals on greater transparency over pay deals, giving shareholders tougher powers and creating more diverse boards and remuneration committees.
Business Secretary Vince Cable said there had been a "clear market failure", with top pay increasing by five times as much as the average worker's wages last year.
Unions attacked the Government, saying it had "spectacularly failed" to make any significant changes, including rejecting a plea for workers to be represented on company remuneration committees. Mr Cable set out the Government's plans a day earlier than expected after Labour tabled an urgent question.
He said it was not Westminster's job to "micro-manage" companies but insisted there were steps it could take, adding that the Government planned to focus on greater transparency, more shareholder power, board diversity and sharing business best practice.
He warned there was "no magic bullet" for tackling the problem, but stressed: "We cannot continue to see chief executives' pay rising at 13% a year while the performance of companies on the stock exchange languishes well behind."
Under the proposals, what people were paid would be clear and easily understood by shareholders and workers, while voting rules would be changed so investors could challenge their boards more vociferously and hold them to account.
Companies will have to explain how they have taken workers' views into account, while Mr Cable urged greater use of a right to request that larger firms consult them on pay. The Government is to consult on a series of suggestions, including giving shareholders a binding vote on pay policy.
TUC general secretary Brendan Barber said: "Through its many consultations and speeches, the Government has made a compelling case for radical reform of executive pay. It's very disappointing then to see that ministers have spectacularly failed to make any significant changes to the status quo.
Stuart Fraser, of the City of London Corporation, said: "I strongly believe that the owners of businesses should be entirely responsible for determining pay awards to managers and other staff they employ."
Mr Cable told MPs that 6% of members of remuneration committees were executives at other companies, so they had an inherent interest in promoting a culture of high pay.