UK eyes giving shareholders pay vote
Source: Agencies |
June 21, 2012, Thursday
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Print Edition
Print Edition
THE British government will propose legislation to give company shareholders a binding vote on executive pay and exit payments, Business Secretary Vince Cable said yesterday.
The plans follow criticism of soaring executive pay, especially at banks, and revolts by shareholders against the compensation of executives.
"There is compelling evidence of a disconnect between pay and performance in large UK-listed companies. It is right that the government acts to address this clear market failure," Cable said.
The pay package of Martin Sorrell, CEO of advertising giant WPP Plc, was rejected by 59.5 percent last week. Sorrell had been awarded a 60 percent rise in pay and other benefits to 6.8 million pounds (US$10.6 million) for 2011. That included a 30 percent rise in his basic salary to 1.3 million pounds, a 2-million-pound annual bonus and 3 million pounds in deferred shares and other benefits.
At the Barclays annual meeting, 31 percent of shareholders voted against the pay structure of Barclays Bank, which included 17 million pounds for CEO Bob Diamond. Insurer Aviva suffered a 54 percent vote against its remuneration report, and Chief Executive Andrew Moss stepped down shortly afterward.
Shareholders now have only an advisory vote on remuneration.
Cable called for shareholders to have a binding vote on company pay policies and the policy on exit payments. A vote would be held annually unless the firm planned no policy change - in which case a vote would be held every three years.
The plans follow criticism of soaring executive pay, especially at banks, and revolts by shareholders against the compensation of executives.
"There is compelling evidence of a disconnect between pay and performance in large UK-listed companies. It is right that the government acts to address this clear market failure," Cable said.
The pay package of Martin Sorrell, CEO of advertising giant WPP Plc, was rejected by 59.5 percent last week. Sorrell had been awarded a 60 percent rise in pay and other benefits to 6.8 million pounds (US$10.6 million) for 2011. That included a 30 percent rise in his basic salary to 1.3 million pounds, a 2-million-pound annual bonus and 3 million pounds in deferred shares and other benefits.
At the Barclays annual meeting, 31 percent of shareholders voted against the pay structure of Barclays Bank, which included 17 million pounds for CEO Bob Diamond. Insurer Aviva suffered a 54 percent vote against its remuneration report, and Chief Executive Andrew Moss stepped down shortly afterward.
Shareholders now have only an advisory vote on remuneration.
Cable called for shareholders to have a binding vote on company pay policies and the policy on exit payments. A vote would be held annually unless the firm planned no policy change - in which case a vote would be held every three years.
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