Vince Cable announces measures to combat excess executive pay

PoliticsHome reports:

Vince Cable has unveiled a raft of measures to combat excess executive pay, including binding votes for shareholders and a ‘clawback’ of salaries of failed bosses.

In a surprise move, the Business Secretary told MPs one day earlier than expected that the Government will require firms to provide a single figure for each director’s pay.

Dr Cable admitted is was “not the Government’s role” to micro-manage company pay but there were steps that could be taken to tackle the “clear market failure”.

Setting out the measures, he said: “First [we want to see] greater transparency so that what people are paid is clear and easily understood. More shareholder powers, such as the introduction of binding votes so they can hold companies to account. More diverse boards and remuneration committees, and best practice led by business and investor community.”

Vince Cable said:

There is a disconnect between top pay and company performance

* Newshound: bringing you the best Lib Dem commentary in print, on air or online.

Read more by or more about .
This entry was posted in News.


  • David Evans 23rd Jan '12 - 6:00pm

    It will take a lot more than this to achieve anything material, but that would stir things up so much the Tories wouldn’t let us do it. In fact I doubt if New Generation Labour would have the bottle to let Vince do what is needed either.

  • When will we get one share holding, one vote? That way ordinary share holders would actually have a voice, and we could have a genuine share holding democracy.

  • Silent Hunter 23rd Jan '12 - 7:26pm

    When I think back to all those things that Vince Cable was going to do to sort out the Greedy Bankers . . .

    . . . and THIS, is the best he could come up with?

    Why doesn’t he just come clean and say . . . “You know what? I rather like my chauffeur driven Government limo and all the perks of government and I’m not going to upset the very people who provide this for me – so here’s a soft cushion to throw at the Bankers, to pretend that I’m actually doing something about it”

    Absolutely useless! The Bankers must be laughing up their sleeves at us.

  • Tony Dawson 23rd Jan '12 - 9:56pm

    @Simon McGrath:

    “All the evidence though is that greater transparency in pay has increased, not decreased the amount paid.”

    Au contraire. All the evidence is that it hasn’t affected the tendency for pay to accelerate out of control one teensy little bit.

  • Stephen Donnelly 23rd Jan '12 - 10:01pm

    As Simon McGarth notes transparency is a good thing. There are two opposing arguments. One that top executives are able to command high salaries because they are unique talents, operating in International markets; just like premiership footballers, there are only a few talented individuals who can make a difference at the highest level. The other argument is that company boards often act in their own self interest rather than those of shareholders, and the directors pay themselves well above their free market worth whilst their companies surf favourable market conditions to which they have contributed little. I have come across both in situations in real life. Transparency will help the shareholders distinguish between them. This is a sensible reform from a government minister who thoroughly understands his brief.

  • Richard Swales 23rd Jan '12 - 11:39pm

    Where can we find a list of the proposals? Is the “single number” meant to ban performance related pay then? As I’ve said before, managers and traders can be just as irresponsible and short-term to get a pay rise as they can be to get a bonus – only when the house of cards falls down, you don’t need to keep paying the bonus whereas a pay rise is difficult to reverse and is calculated into the severance package.

    I want to know if it is intended to apply to all companies listing in London, including the ones with management overseas (e.g. from the former USSR). Also, if it won’t apply to foreign listed companies, we might see a lot less resistance to foreign takeovers of UK companies. Management can stay in place after the takeover and finally pay themselves what they see as the market rate.

    Binding shareholder votes make sense (why on earth would you invest in a company that didn’t have them?), although we are told that the main shareholders in these companies are institutions that put a high value on management – and a fairly low value on social cohesion (which in any case they have no impact on), so why are we expecting this to make a big difference?

    More generally though, all this stuff is about shareholder rights. I tend to not be a big supporter of imposing these top down. People who don’t leave their money in savings accounts, but arrive in the City with a big pile of money because they have heard it is a place where the rich get made richer, without the need for them to apply any intelligence of their own at all, even to the question of who should be managing their money and how, are not my idea of unfortunate victims. If they invest their money in companies which see their members votes as non-binding, through useless traders who trade fads instead of fundamentals yet charging high fees, then it is their problem and not ours. We don’t have a duty to make their dream of effortless wealth come true if they don’t know how to do it for themselves. If shareholders move their investments to companies which respect them more then good for them. To most people though I’d recommend opening a SIPP and keeping the money in bonds and having nothing to do with any of this.

    As for me, if I had enough spare money to buy company shares, I’d be looking for management that knew how to make money for itself, over management that didn’t think it had enough impact on the business to deserve getting a lot – but it takes two views to make a market as they say.

  • All good stuff, but a bit underwhelming. What we really need is a proper valuation of share options and other bonus arrangements when they are conferred.

    And frankly I would impose tax penalties on salaries or equivalent above a limit of £150k (ie the Prime Minister’s salary). A soft version would be a presumption that salaries (and “consultancy fees”) above this limit are NOT deductible against corporation tax, unless the package can be specifically demonstrated to be wholly, necessarily and exclusively in the interests of the business. And of course a ban on public sector salaries above this limit.

  • Paul McKeown 24th Jan '12 - 12:28am

    Very pleased to see Vince Cable being barracked by the likes of Philip Davies and Peter Bone. The greater their fury, the better the policy, so keep up the good work!

  • Richard Swales 24th Jan '12 - 5:02am

    @Paul K – what would be the rules? Isn’t is a condition now that it has to be for the benefit of the business ro be tax deductible?

  • Simon McGrath 24th Jan '12 - 5:43am

    @Paul K “All good stuff, but a bit underwhelming. What we really need is a proper valuation of share options and other bonus arrangements when they are conferred”
    Not sure what you mean by this. Companies have to take account of the v alue of share options ( which in any case are pretty rare now in US firms) using he Black Scholes formula.

Post a Comment

Lib Dem Voice welcomes comments from everyone but we ask you to be polite, to be on topic and to be who you say you are. You can read our comments policy in full here. Please respect it and all readers of the site.

To have your photo next to your comment please signup your email address with Gravatar.

Your email is never published. Required fields are marked *

Please complete the name of this site, Liberal Democrat ...?


Recent Comments

  • David Evans
    Jeff, If I remember the good old days correctly, EU citizens didn't need visas to come and work in the UK, so the stats you choose to present are very slante...
  • Jeff
    Roland 29th Mar '23 - 3:37pm: Brexit has effectively made the UK unattractive to foreign workers (with the level of skills we require)… In t...
  • Jeff
    Roland 29th Mar '23 - 3:37pm: The shortage of GPs was predicted some years back and has the same root causes as the shortage of HGV drivers and other...
  • Roland
    The fundamental flaw in the OfSTED inspection framework that this tragic case exposed was the 2012 legal exemption from future inspections (unless specific conc...
  • Roland
    @Michael BG re. claw back and taper Firstly, with UBI/GBI we need to get away from the current benefits culture where benefits are given out and then if people...