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| Shareholder vote plan for executive pay deals backed by PM | |
| (about 1 hour later) | |
| David Cameron has signalled his intent to give shareholders binding votes on executive pay, as part of measures to deal with excessive salaries. | David Cameron has signalled his intent to give shareholders binding votes on executive pay, as part of measures to deal with excessive salaries. |
| href="http://www.telegraph.co.uk/news/politics/david-cameron/9000253/David-Cameron-interview-those-who-work-hard-will-be-rewarded.html" >In a Sunday Telegraph interview, the PM says the market for "top people" is not working and "needs to be sorted out". | |
| A recent survey said total earning for directors in FTSE 100 companies rose by 49% in 2010, compared with an average rise in salaries of 3.2%. | A recent survey said total earning for directors in FTSE 100 companies rose by 49% in 2010, compared with an average rise in salaries of 3.2%. |
| Labour has called for policies on pay and a "more responsible" capitalism. | Labour has called for policies on pay and a "more responsible" capitalism. |
| It said wages that had "no relation to performance" undermined trust and has suggested staff representatives should sit on pay committees, and remuneration deals simplified. | |
| The measures being considered by the coalition are said to include plans for shareholders to get a veto both on pay packages and on deals given to executives who leave jobs in which they have failed. | |
| Merry-go-round | Merry-go-round |
| Mr Cameron told the Sunday Telegraph: "Let's empower the shareholders by having a straight, shareholder vote on top pay packages. | Mr Cameron told the Sunday Telegraph: "Let's empower the shareholders by having a straight, shareholder vote on top pay packages. |
| "We've got to deal with the merry-go-round where there's too many cases of remuneration committee members sitting on each others boards, patting each other's backs, and handing out each other's pay rises. | "We've got to deal with the merry-go-round where there's too many cases of remuneration committee members sitting on each others boards, patting each other's backs, and handing out each other's pay rises. |
| "We need to get to grips with that." | "We need to get to grips with that." |
| BBC political correspondent Ross Hawkins says the prime minister's proposals are not finalised and will need to be discussed within the coalition government. | BBC political correspondent Ross Hawkins says the prime minister's proposals are not finalised and will need to be discussed within the coalition government. |
| Both the government and the opposition are keenly aware of the public demand for fairness, a word Mr Cameron highlighted in his newspaper interview, our correspondent added. | Both the government and the opposition are keenly aware of the public demand for fairness, a word Mr Cameron highlighted in his newspaper interview, our correspondent added. |
| Business Secretary Vince Cable is expected to publish the results of a consultation on bosses' pay this month, including shareholders' powers. | Business Secretary Vince Cable is expected to publish the results of a consultation on bosses' pay this month, including shareholders' powers. |
| In the interview Mr Cameron said: "We need to redefine the word fair. | |
| "We need to try to give people a sense that we have a vision at the end of this, of a fairer, better economy; a fairer, better society, where if you work hard and do the right thing you get rewarded." | |
| He added: "There is a very strong sense that small businessmen and women working hard, grafting away, building a business and not paying themselves huge amount of money, are furious with these rewards at the top for people who aren't taking the sort of risks they're having to take." | |
| 'Three tests' | |
| An inquiry concluded last year by the High Pay Commission found that the pay of top executives at a number of FTSE companies had risen by more than 4,000% on average in the last 30 years. | |
| Set up by pressure group Compass, the commission said the disparity between what top executives and average workers earn has been building for many years. | |
| Meanwhile, the survey from research firm Incomes Data Services said average income for FTSE 100 directors was now £2.6m, while chief executives had seen pay rise 43% in 2010. | |
| In a statement issued in response to Mr Cameron's latest comments, shadow business secretary Chuka Umunna said the prime minister was "failing to meet the three tests of greater accountability, transparency and fairness which Labour has set to end the 'something for nothing' culture in our boardrooms and the City". | |
| He added: "The prime minister is dragging his feet and has not given any indication that he will implement the recommendations of the independent High Pay Commission in full. | |
| "There is no point giving shareholders a vote on executive pay without the greater transparency needed so they can discern the aggregate remuneration executives receive under the complex arrangements currently in place." |