LEGISLATION to hand shareholders binding votes on executive pay is set to get the go-ahead as the government today closes its consultation on proposed regulations for remuneration reports.
This was the last chance for outside interests to have their say before the rules are debated in the House of Commons on 16 October as part of the Enterprise and Regulatory Reform Bill, which could be on the statute books by the end of this year.
In addition to introducing binding votes on directors’ pay the rules will force businesses to publish the criteria that guide their remuneration policies and explain how they have been followed on an annual basis.
However a City law firm has raised concerns that the new rules may over-simplify pay packages and fail to take into account extraordinary situations.
“Proposals to make businesses include a headline figure for each director’s annual remuneration may be misunderstood and cause conflict rather than aid transparency,” said Matthew Findley of Pinsent Masons.
“Once in place, the pay policy could be a straitjacket for business.”