Government unveils overhaul of directors’ pay
The Business Secretary, Vince Cable today announced reforms of the framework for directors’ remuneration. This package of measures will, according to the Departments for Business, Innovation and Skills (BIS), “address failures in corporate governance by empowering shareholders to engage effectively with companies on pay”.
More specifically, BIS says the reforms will:
The government intends the reforms to be enacted by October 2013.
To introduce these reforms, the government will shortly bring forward amendments to the Enterprise and Regulatory Reform Bill, which is currently before Parliament. Revised, simplified regulations setting out how companies must report directors’ pay will be published at the same time. This will include measures to make pay reports clearer and more transparent for investors. BIS says: “In line with good policy making, we will give people the chance to comment on these regulations before they become law.”
A final word
“At a time when the global economy remains fragile, it is neither sustainable nor justifiable to see directors’ pay rising at 10% a year, while the performance of listed companies lags behind and many employees are having their pay cut or frozen.
“In January we kicked off a national debate aimed at encouraging shareholders to become more actively engaged as company owners in better aligning directors’ pay with performance. I have been greatly encouraged by the ‘shareholder spring’ and I want to see that momentum sustained. That is why I am bringing forward legislation to strengthen the powers of shareholders through a binding vote on pay.” - Vince Cable, Business Secretary.
Want to know more?
A detailed statement of the government’s policy on directors’ pay is available at www.bis.gov.uk/policies/business-law/corporate-governance/executive-pay.
* The FRC’s Financial Reporting Lab has developed a methodology to calculate the single figure. For variable elements, the single figure reflects actual pay earned rather than potential pay awarded. This includes full bonuses awarded for the reporting period; and long-term incentives where the reporting year is the last financial year of the performance cycle.
What's happening in reward?: The Reward Management Update 2012
The seventh annual e-reward conference held in London on 31 October and 1 November 2012 focussed on:
managing reward in a recession
aligning pay and business performance
the need for reward professionals to act as strategists not tec...