Appearing before Parliament, business secretary Vince Cable said that shareholders should have binding votes on new executive pay deals and on any director’s contracts that are over a year long. “No proposal on its own is a magic bullet but together they can enable a major transformation to get underway,” Cable told Parliament, according to Reuters. “Shareholders need powers to hold the board to account and I will consult shortly on specific proposals to reform the current voting arrangements and give shareholders a binding vote, enabling them to exert more pressure on boards,” he added. Sacha Sadan, director of corporate governance at Legal & General Investment Management, called for remuneration policies to be made more transparent. Executive performance targets, and the level of bonus to be rewarded if these objectives are met, should be made “clear and explicit”, Sadan says. The method of paying the award, through separate pay, bonuses and share options, should also be disclosed. “Pay and especially bonuses need to be aligned to the long-term interests of shareholders and executives themselves should own a meaningful amount of shares in the company,” Sadan added. Send us your thoughts (in strict confidence) or submit an article in response: Email: [email protected]
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EDITOR’S CHOICE
STRAW POLL
Will markets in 2012 have a tougher time than 2011?