BUSINESS groups today praised the government’s plans to make company directors more accountable to their shareholders, but warned the public debate around executive remuneration is at risk of being derailed by false information.
“Out of control remuneration at some FTSE companies is damaging the reputation of British business as a whole – giving shareholders a binding vote will help to rein in the excesses, and restore faith among investors and the wider public,” said Simon Walker from the Institute of Directors (IoD).
The Confederation of British Industry (CBI) also supported the government’s plans to increase accountability, but worried about figures being used to justify changes.
“Only by first getting the facts right can we have a meaningful debate and enable shareholders to hold boards to account,” said policy director Katja Hall.
“For instance, last year pay for chief executives rose by an average of 10 per cent, not 49 per cent which has been widely reported. “
Meanwhile, the IoD disagreed with some of the specific proposals.
“The proposal to raise the threshold for such votes beyond a simple majority, for example, is flawed,” said Walker.
“A binding majority vote is straightforward and fair.”
The consultation on voting rights was launched by the Department for Business, Innovation and Skills in March and ends today.
Finalised proposals are only likely to be published in several months’ time.