Speaking at the Liberal Democrat conference in Birmingham, Cable will suggest that there is a market breakdown when it comes to pay for execs.
“I want to call time on payouts for failure,” he will say, adding: “The disconnect between pay and long-term performance suggests that there is something dysfunctional about the market in executive pay or a failure in corporate governance arrangements.”
It is not clear what data the consultation will draw upon to evaluate the link between long-term performance and executive pay and whether there is a disconnect.
The paper will ask respondents to evaluate a range of measures to curb some remuneration.
These include the possibility of making shareholder votes on the matter binding, rather than merely recommendations as they are in many cases at present.
Cable will also suggest that companies’ remuneration committees, who are in charge of deciding on execs’ pay, could have some form of employee representation.
And the consultation will ask whether companies should have to improve the way they disclose pay to make it easier for shareholders to understand.
Cable will also preemptively hit back at critics who say he is anti-business, saying: “There is absolutely nothing wrong with generous rewards for those who build up successful businesses... Our goal is absolutely not to set limits on pay.”
Despite fiery rhetoric in the past that has seen the business secretary refer to City traders as “spivs” and call for banks to cut down their “excess profits”, in practice he appears ready to consider a more conciliatory line on pay.
ANALYSIS | WHAT THE CONSULTATION WILL ASK
● BINDING VOTES
The government will look at whether shareholders could be given a binding vote on approving executive pay
One option being examined is having employees represented on the remuneration panel, to ensure that decisions can be challenged
The government will also consult on how to simplify and improve the structure of incentive schemes and the like
A requirement for companies to publish the total pay for each individual director could be introduced
The government is looking at forcing firms to give reasons when they pay bonuses when performance targets have not been met
The consultation isn’t just looking to add new rules – it will also look at disclosure requirements that could be removed