Jan. 24 - Britain's Business Secretary Vince Cable has outlined the government's proposals to rein in soaring executive pay, saying shareholders should be given increased power and complicated pay deals should be more understandable. Joanna Partridge reports.
Shareholders could get to vote on how much bosses of Britain's biggest companies earn in the UK government's most significant attempt in a decade to get executive pay under control. The average pay of top executives rose four times between 1998 and 2010, climbing far faster than share prices and ordinary workers' salaries. This, at a time most Britons' wages are frozen and share prices are performing badly, says Britain's Business Secretary Vince Cable. SOUNDBITE: Vince Cable, Britain's Business Secretary, saying (English): "Of course we want good businessses, and that means that good managers have got to be properly rewarded and that entrepreneurs are encouraged and that's the way we're going to get growth in the future, but that's got to be balanced against the fact in many companies in the past, executive pay has been wildly excessive, it's unrelated to the performance of the companies, there've been far too many rewards for failure." Cable told parliament shareholders could have a binding vote on directors' performance and potential payouts. The government would also allow big firms to include in contracts ways to withdraw bonuses. Trade unions say the proposals don't go far enough. And others aren't convinced by the government's suggestions, says employment lawyer Jonathan Exten-Wright. SOUNDBITE: Jonathan Exten-Wright, Employment Lawyer, saying (English): "I think a lot of it is very vague at the moment and it's difficult to see how it will operate in practice. It rests a lot of faith on shareholder activism for a start and could create a tension between the executive team on one hand and the shareholder vote on the other." Vince Cable's announcement may increase pressure on banks to rein in annual rewards due in the coming weeks. There's been public and political backlash over the bonuses executives may receive at the Royal Bank of Scotland, which is 83 percent owned by the UK taxpayer. But it's still unclear if the government will put its money where its mouth is and block the payment of over 1 million pounds for RBS CEO Stephen Hester. Joanna Partridge, Reuters