Vince Cable attacks excessive fat cat pay
At his keynote speech to the Liberal Democrat conference, Business Secretary Vince Cable is today expected to say that shareholders should have more of a say when it comes to bonuses paid to executives.
He is also expected to outline plans which will force firms to disclose their excessive pay packages.
Mr Cable is expected to set out new rules that will require the total value of salary, shares, pensions and bonuses to be set out every year.
Currently, the details of each executive board member’s salary, pension, bonuses, and shareholdings are recorded but in separate parts of a company’s annual report.
However, under the new proposals, the company will have to fully explain the details of the package, while giving projections of the minimum and maximum each executive could expect the next year.
Furthermore, a total figure will be provided to shareholders for the first time.
Mr Cable, who last year publicly criticised large bonuses, said that giving shareholders a veto over the packages was something he approves of.
His proposals come shortly after a report found that the average annual bonus for a director in a FTSE 100 company has soared by 187% in the last decade.
The findings were in a report by the High Pay Commission and discovered that top executives received a bonus worth 90% last year compared with 48% of salary in 2002, despite the same level of performance within the company and massive share price falls in recent years.
The controversial subject of remuneration packages has been a major issue for some time now and bankers’ bonuses, in particular, have sparked public outrage since many argued that bankers’ bonuses reward the risk-taking culture that led to the financial crisis.
The report by the High Pay Commission also found that average total earnings of directors of banks which were bailed out by the taxpayer were just under £4 million in 2010 compared with £1.7 million a decade ago.