According to business secretary Vince Cable, company shareholders will be given a greater influence over what the nation’s top executives are paid through enhanced voting rights.
Under the proposals published today, companies will have to report annually on how they have responded to shareholder concerns and taken previous votes into account.
Other recommendations include an annual binding vote on future remuneration policy, an annual advisory vote on how remuneration policy has been implemented in the previous year and an increased level of support requirement in votes on future remuneration policy.
The consultation document also proposes a binding vote on exit payments over one year’s salary.
“Good corporate governance is vital to creating the right environment for long-term, sustainable growth,” Cable said. “Shareholders are at the heart of the UK corporate governance framework, so it’s appropriate that we put more information and power in their hands.
“I have no problem with business celebrating success and rewarding talent, but I have heard frustration from all circles that director’s pay goes up when times are good, and yet it still goes up when performance is poor.
“I want shareholders to feel empowered to prevent rewards for mediocrity or failure.”
The proposals are part of a wider package of measures Cable announced in January aimed at addressing failures in the corporate governance framework for executive remuneration.
The deadline for comments is 27 April 2012. They should be sent to firstname.lastname@example.org.