The Government is expected to water down plans to boost shareholder power over executive pay by giving them a binding vote once every three years instead of annually as originally proposed, according to reports.
In March, the Department for Business Innovation and Skills published a consultation aimed at giving shareholders an annual binding vote on executive pay and golden goodbyes worth more than a year’s salary. It also suggested increasing the level of support required beyond a simple majority of over 50 per cent.
The Financial Times reports that Business Secretary Vince Cable is now inclined to scrap the proposal from plans set to be published in the coming weeks, giving shareholders a binding vote every three years instead.
A BIS spokesperson says: “Some respondents thought allowing companies and shareholders the option of agreeing a three-year remuneration policy would encourage long-term thinking on pay, with the option of having an annual vote if companies and shareholders want it.”
On Twitter, shadow Business secretary Chuka Umunna said: “What a shame that as shareholders are becoming more activist the Government is showing itself to be out of step with the tide of investor opinion.”
The Association of British Insurers represents close to a fifth of shareholders. it says its members “supported the introduction of a binding vote on future remuneration policy over a two to three year period.”
BIS’s consultation was published amid speeches from party leaders on reforming capitalism. Since he first used the phrase in the speech to the Labour party conference in September, Ed Miliband has criticised what he calls “predatory capitalism”. In January, Prime Minister David Cameron attacked the “out of control” bonus culture in the City, calling for “popular capitalism” which “allowed everyone to share in share in the success of the market”.
Since then shareholder revolts have led to problems for various companies including Trinity Mirror and Aviva. In May, Aviva Andrew Moss stood down after 54 per cent of shareholders voted against his remuneration package.