Shareholders to control executive pay?

The Government has published a consultation paper on enhanced shareholder voting rights in relation to executive remuneration.

The Department for Business Innovation & Skills (BIS) proposals apply to the remuneration of directors in UK incorporated quoted companies and include:

  • An annual binding vote on future remuneration policy;
  • Increasing the level of support required on votes on future remuneration policy;
  • An annual advisory vote on how remuneration policy has been implemented in the previous year;
  • A binding vote on exit payments of more than one year’s base salary.

The government’s objective is to enable shareholders to promote a stronger, clearer link between pay and performance in order to prevent rewards for mediocrity or failure, while still allowing for exceptional performance to be rewarded. The deadline for responding is 27 April 2012.

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