Cable to climb down on excessive executive pay curb

Updated: 
Vince CableBusiness Secretary Vince Cable is set to climb down on radical plans to give shareholders more power to curb excessive executive pay.

Bosses are likely to be spared an annual binding vote on their pay, which had been a flagship idea in a paper on tackling boardroom greed, in favour of a poll every three years, according to the Sunday Times.

The expected climbdown comes despite numerous rebellions over remuneration reports in recent weeks, in a move dubbed the shareholder spring.

Currently, shareholder votes are advisory, which means companies can ignore them.

But they have still proved effective at exerting pressure on companies, with Aviva's Andrew Moss among the bosses who have been ousted in recent months.

It had been feared that a binding annual vote would make investors less inclined to protest in case they destabilised management teams and would add to bureaucracy.

Mr Cable told the newspaper: "The shareholder spring has been very effective in holding shareholders to account. But if investors have to do that every year with every company on the stock exchange, they could get tied up in bureaucracy."

A spokesman for the Department of Business, Innovation & Skills confirmed that a three year remuneration policy was being considered but said no decision had been made. A final package, which may also include measures to strengthen the current backwards-looking advisory votes, is expected in weeks.

Commenting on the reports, shadow business secretary Chuka Umunna said: "It is greatly disappointing that the Government is backing down on its proposal for annual binding shareholder votes on executive pay.

"At a time when shareholders are becoming more assertive and activist in their approach, the Government appears to be turning the other way, showing itself to be out of step with the tide of investor opinion. This latest U-turn, with the Government drastically watering down its flagship proposal on improving corporate governance five months after it was announced with such fanfare, only adds to the sense of chaos and shambles at the heart of Government."

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