The Institute of Directors (IoD) is calling on the next government to give investors a bigger say in executive pay by adopting a new rule forcing stock-market listed firms to give shareholders a second vote if a significant minority reject the company’s pay policy. It proposes that if 30% or more of investors oppose a remuneration policy the company should be required to reconsider it and give shareholders another vote, ideally at an exceptional general meeting. The IoD points out that, despite a series of high-profile shareholder rebellions, 97% of remuneration reports were nodded through in 2016.
Oliver Parry, head of corporate governance at the IoD, said:
‘Business has been facing a crisis of public confidence since the financial crisis, and the political impetus to intervene will not disappear, whoever is elected.’