Prime minister claims “the market for top people isn’t working”
Prime minister David Cameron has spoken about the government’s plan to change legislation to curb excessive boardroom pay.
Cameron revealed that shareholders could be given powers to veto top executive pay packages to ensure that austerity measures are being extended to the boardroom.
He insisted that action needs to be taken to ensure that executives are not rewarded for failure in the form of remuneration deals and severance packages.
Under the plans, shareholders could be given a vote to set limits of pay when senior executives join and leave a company to ensure that they are no longer able to receive huge payouts if their time at the company was not successful.
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Speaking to The Daily Telegraph, Cameron said: “The market for top people isn’t working, it needs to be sorted out.
“Let’s empower the shareholders by having a straight, shareholder vote on top paid packages.”
Confirming one element of the package, he said: “The absolute key, and I can confirm this today, that does need to happen and will happen is clear transparency in terms of the publication in terms of proper pay numbers to really see what people are being paid and then binding shareholder votes so the owners of the company vote on the pay levels and – absolutely key – votes on parts about dismissal packages and payments for failure.
“We have a Queen’s Speech coming up in the spring this year. I don’t want to pre-empt it but it is very likely to include legislation on companies and on banking and things like that, so there is room to make legislative changes if that is necessary.”
The issue has attracted widespread attention in recent months, with the three main political parties speaking extensively about the subject. Deputy prime minister Nick Clegg attacked what has been described by the Government as “crony capitalism”. Labour has offered a series of proposals for reform, including allocating a place for employees on remuneration boards, while the publication of a league table of how much more bosses earn than employees was another one of its recommendations.
Labour leader Ed Miliband said: “There can’t be any more foot-dragging and backsliding.
“If David Cameron wants a more responsible capitalism – responsibility at the top and the bottom – then this would be a start.”
However, the prime minister cut a determined figure while speaking on the issue, saying: “We’ve got to deal with the merry-go-round where there’s too many cases of remuneration committee members sitting on each other’s boards, patting each other’s backs, and handing out each other’s pay rises. I think we need to get to grips with that.”