Otto Thoresen, the Director General of the Association of British Insurers, issued a positive comment on the announced plan by UK Business Secretary Dr. Vince Cable to regulate payments to company executives.
The proposed measures include giving shareholders binding votes on executive pay every three years. If compensation plans are changed during that period, another vote would be required. Companies will also be required to annually publish how much their executives are paid, including bonuses, “exit” payments and other compensation.
Thoresen stated: “Dr. Cable’s proposals are practical, workable and should help tackle excessive executive pay. These powers would give investors more influence to ensure Boards do their jobs and link pay to performance with clear accountability to shareholders.
“The ABI strongly backs a forward looking binding vote on pay strategy and we are pleased the Government has decided to proceed with this with a 50 percent voting threshold. Having a vote on a three year remuneration policy should help the task of keeping executive pay proportionate and aligned to corporate strategy; having a fixed annual vote on pay has tended to drive up pay in practice rather than restrain it.
“We also welcome the Government’s decision to include exit payments in the forward looking vote; again this will help ensure exit payments are within previously agreed boundaries.”
Source: Association of British Insurers
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