Cable to get tough on company pay

18 September 2011 Last updated at 20:54 ET

Mr Cable is expected to hit out at “appalling inequalities of income and wealth”

Shareholders will have a bigger say on executive pay under plans due to be announced by the business secretary.

In his keynote speech to the Lib Dem conference, Vince Cable is expected to say the system of remuneration has become “dysfunctional”.

“People accept capitalism but they want responsible capitalism,” he will say.

Firms will have to set out criteria for executive pay in a bid to “call time on pats for failure”, Mr Cable will tell delegates in Birmingham later.

He is also expected to float a series of other proposals aimed at reining in multi-million pound packages.

At the party conference, Mr Cable is expected to say there is “nothing wrong with generous rewards” for successful businessmen, but will criticise “appalling inequalities of income and wealth”.

He will unveil plans to require companies to set out the criteria used to determine pay and perks.

Other proposals include putting employee representatives on remuneration committees.

BBC political correspondent Carole Walker said Mr Cable will say his big regret this year is not securing tighter controls on bank pay and bonuses, allowing the message to go out that unrestrained greed is acceptable.

“It’s a message that will go down well with his conference here, but Mr Cable will also acknowledge that the big question now is how to get growth to turn the economy around,” she said.

Binding vote?

Changes to the reporting requirements for all stock exchange-quoted companies are due to come into force in October 2012, following a three-month consultation.

At present. the details of each executive board member’s salary, pension, bonuses, and shareholdings are recorded but in separate parts of the annual report.

Under the new system they will be brought together in one table – with a total figure given to shareholders for the first time.

An explanation of how the package was arrived at will also have to be included, as well as projections of the minimum and maximum each executive could expect the next year.

Mr Cable’s Department for Business, Innovation and Skills will also publish a discussion paper on further moves to curb excessive pay in October.

One idea up for debate is giving shareholders a binding vote on pay.

Aides said the median total remuneration for FTSE100 chief executives had risen from £1m a year in 1998 to £4.2m a year in 2010.

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