BUSINESS secretary Vince Cable has penned a warning letter to the renumeration committees of all FTSE 100 companies, telling them to bring pay in line with performance or risk even tougher rules.
Explaining his decision to write to the companies, Cable warned of public resentment surrounding large payouts, adding that he wants to see firm commitments to changing the way executives are paid, not just quick-fixes.
“Getting pay wrong damages popular trust in business, and undermines the duty to promote the long term success of the company.
“Policies that reward executives out of proportion to the value they create are a clear dereliction of the duty to promote the success of the company for the long term. They can also encourage perverse behaviour that ultimately damages the company going forward,” Cable wrote, adding that banks in particular must seize the chance to change.
The warning is timed to coincide with Barclays’ annual general meeting tomorrow. The bank has come under fire from its investors over a £2.4bn bonus pot, a 10 per cent increase on the amount paid out in 2012, despite a 32 per cent fall in profits.