Business secretary Vince Cable’s consultation on executive pay published yesterday set out plans that he hopes will give shareholders more influence over executive pay.
● BINDING YEARLY PAY VOTES
Cable wants an annual binding vote on every listed company’s future remuneration policy. Because of the “fragmented nature” of shareholders in UK-listed firms, the report proposes a 75 per cent threshold.
● PAST PAY ADVISORY VOTES
To keep tabs on how popular the resulting pay packages are, Cable also sets out a non-binding annual vote on the past year’s remuneration. If this fails to pass 75 per cent, the firm should give an explanation.
● EXIT PAYMENTS WILL FACE A VOTE
Firms would also have to win a vote on exit payments worth more than one year’s salary. The report admits this could lead to delays to payouts, but hopes the plans prompt investors to voice concerns early.
● MORE DETAIL AND TIMINGS
The government will later this year bring out a more rigid guide to what companies should include in their remuneration report. Companies can submit responses until 27 April, and the government aims to bring new rules into law by spring 2013.