Shareholders should get more power over executive bonuses, according to the Institute of Directors

 
Mark Sands
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The UK will head to the polls on 8 June. (Source: Getty)

Investors could be given more power to reject bosses bonus packages under the latest proposals from the Institute of Directors.

In the latest entry in a series of manifesto papers, the IoD is calling on ministers to hand shareholders more power.

Under the plans, if 30 per cent of investors oppose the remuneration report at the annual meeting, the company would have to look again at their pay policy and give shareholders another vote.

IoD head of corporate governance Oliver Parry said: “UK corporate governance is highly regarded across the world, but there is still a pressing need to rebuild public trust in big business to work in the long-term interests of investors and employees, rather than the short-term interests of managers.

“Now is the time for sensible reforms which increase transparency and draw more engagement from shareholders.”

Read More: Corporate governance: Board reformers must not rest on their laurels

The government was continuing to consider responses to a consultation on corporate governance when the Prime Minister Theresa May called an early election.

The IoD submission comes after parliament's Business, Energy and Industrial Strategy Committee last month suggested remuneration committee chairs should be expected to resign if pay proposals are backed by less than 75 per cent of voting shareholders.

And where a pay package is rejected by more than 75 per cent of voting shareholders, MPs said that the following year a vote on pay should be regarded as binding.

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