This issue continues to dominate the headlines particularly with the so-called "shareholder spring" with shareholders at, among others, Aviva, Cairn Energy and Prudential voting against large pay packets for senior executives at their AGMs. The latest initiatives for dealing with this issue are:

  • The government's proposals referred to in the Queen's Speech "to strengthen the framework for setting directors' pay" by "strengthening shareholder power". This is in line with Vince Cable's announcement in January, followed by the BIS consultation which closed on 27 April, on proposals to give shareholders greater influence on executive remuneration through enhanced voting rights including:
    • an annual binding vote on future remuneration policy
    • an annual advisory vote on how remuneration policy has been implemented in the previous year;
    • increasing the level of support required on votes on future remuneration policy; and
    • a binding vote on exit payments of more than one year's base salary.
    We now await the outcome of the consultation and draft legislation.
  • The High Pay Commission published a report at the end of last year making a number of recommendations for amendments to the UK Corporate Governance Code. These include paying executives a basic salary with an additional performance-related element only where necessary, requiring companies to publish an anonymised list of their top ten highest paid employees and the production of remuneration reports in a standardised format which would include the total remuneration package for each executive and how this is calculated.

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