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LibDem conference: Cable to call for executive pay crackdown

Business Secretary Vince Cable is proposing a clampdown on executive pay through a range of measures including a shareholder veto and the ability to claw back parts of executive pay packages.

The Liberal Democrats are publishing a discussion paper today which will look at ways to rein in excessive executive pay.

Ahead of his keynote speech at the Liberal Democrat conference in Birmingham today, Cable (pictured) told the BBC this morning: “Executive pay has increased by over 400 per cent over the last decade at a time when share prices haven’t increased at all and basic pay of most employees hasn’t increased at all.

“There is a real problem here and what we’re looking at in this proposed discussion paper is different ways in which shareholders can have a more effective voice.”

The proposals include a bigger voice for shareholders to allow them to veto remuneration packages of senior management, and a requirement for companies to set out how levels of pay are determined.

Sky News has also reported that the discussion paper will include a proposal to claw back parts of executive pay packages, echoing similar legislation in the US that requires directors to forfeit long-term incentives that have been awarded on the basis of inaccurate or incomplete information.

Cable is also keen to see the Independent Commission on Banking proposals, which call for UK retail banking arms to be ringfenced, to be implemented through the financial services bill ahead of the 2019 deadline.

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. The fact that directors often have a significant shareholding themselves won’t be an issue of course…. And did Sky News hack someone’s phone to get the additional intel?

  2. But what about the pay of unaccountable quangos? I’m thinking of Mr Sants and his £800K salary package as well as all those other regulators, quangos and local authority chiefs that sit where voters cannot reach.

    Although I support this in principle I believe that the Government should put its own house in order and lead by example before kicking the private sector.

    It’s a case of do as I say at present.

  3. Totally agree with Mr Smug.
    The government should begin to put its own house in order and start with the quango’s, who often appear to set their own budget, salaries,bonus payments etc. with no say from the stakeholders.
    Go on Mr Cable,If you want us to believe in fairness, start here..

  4. The TSC is about to embark on an investigation into the FSA’s lack of accountability for pretty much anything and everything that it does, not least on the issue of executive pay levels.

    The trouble, though, as Hector Sants smugly pointed out back in March, is that the only way any conclusions or recommendations arising from that investigation are likely to be implemented is if the law is changed, specifically removing the FSA’s comfy position of near-total lack of accountability.

    Given that the government has already announced that the FCA, like the FSA, will be accountable only to its own board which, of course, means accountable to nobody, there appears to be little prospect of anything changing. If that isn’t an extremely unhealthy state of affairs, then I don’t know what is. To put it mildly, Hector Sants’ claim to be a big supporter of accountability rings rather hollow.

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