British Prime Minister David Cameron has vowed to give shareholders the right to veto executives’ pay packages, amid mounting political pressure and public anger over huge salaries and bonuses.
With Britons bracing for a tough year amid a gloomy economic outlook and the politically charged bank bonus season approaching, Cameron took a tough line on sky-high salaries in a Sunday newspaper interview.
He called for the end of the “merry-go-round”, where highly-paid bosses sit on each other’s boards and approve pay awards.
“The market for top people isn’t working, it needs to be sorted out,” he told the Sunday Telegraph.
“Let’s empower the shareholders by having a straight, shareholder vote on top paid packages.”
The comments came amid growing political pressure for the government to prove it is serious about tackling so-called “fat cat” pay, with repeated calls from the opposition Labour party leader for action.
Despite repeated controversies over bosses being handed huge payoffs even in cases where companies have failed, currently shareholders can only express their disapproval through an advisory vote.
No details have been agreed on how the new arrangements would work but they could form part of reforms being worked on by business minister Vince Cable, which would require legislation.
He is due to publish results of a wide-ranging consultation this month.
Bosses’ pay has been particularly sensitive in Britain since the 2008 financial crisis, when top bankers left jobs with enormous payoffs despite their institutions taking the blame for wrecking the global economy.
Labour has put forward a package of its own proposals to curb executive salaries, such as a place for employees on remuneration boards and publishing a league table of how much more bosses earn than employees.
In an interview published on Saturday, Labour leader Ed Miliband scorned Cameron’s stance on executive pay.
“If one of the big battlegrounds of British politics is going to be who is really going to take action on executive pay, I say ‘bring it on’,” he said.
Feathering their nests
“Does anyone really believe that David Cameron came into politics to create more responsible capitalism? The public are not going to buy it.”
But Cameron insisted in Sunday’s interview that he was determined to take on bosses who seemed to care only about feathering their own nests.
“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,” he said.
“I think we need to get to grips with that.”
He added people needed a sense that “we have a vision at the end of this, of a fairer, better economy, a fairer, better society, where if you work hard and do the right thing you get rewarded.”
The Conservatives’ junior coalition partners, the Liberal Democrats, have also spoken out in favour of curbing executive pay. — AFP