Cable’s plan for pay votes splits the City

Marion Dakers
VINCE Cable’s plans to crack down on executive pay split opinion yesterday, with shareholder groups welcoming the proposals as business leaders warned that the plans risk “micro-managing”.

The business secretary yesterday laid out plans to force firms to hold binding votes on its future remuneration and for “golden parachute” payments worth more than one year’s salary, in a bid to curb spiralling pay at the top of listed firms.

Lawyers, including Freshfields partner Simon Evans, predicted that even typical executive exit payments will be caught under the proposed rules, and could force firms to buy directors out of their current terms of employment.

Cable also said a higher than normal portion of investors should be required to approve future pay packets, to reflect the “increasingly fragmented” nature of the stock market.

But CBI director general John Cridland said: “The [threshold] would be damaging, leaving decision making about company strategy in the hands of a minority of shareholders who may not represent the wider group.”

The Institute of Directors, which supports more powers to curtail executive pay, also voiced concerns about setting “arbitrary thresholds”.

But investor group PIRC said the plans help foster “a retooling of shareholder rights in respect of pay”.

PIRC and the National Association of Pension Funds both pointed out that shareholders already have some binding powers.