6 November 2012
Chuka Umunna MP, Labour’s Shadow Business Secretary, commenting on Income Data Services’ study of trends in executive pay, said:
“We need a better and more responsible capitalism that better serves the people of this country. Where rewards for failure exist in boardrooms, this is a bad thing for shareholders, the economy and for society.
“It is encouraging that this study has found a shift towards more long term reward structures in executive pay, linking remuneration more closely with long term company performance. This in part reflects the greater assertiveness of shareholders over remuneration policy and their refusal to accept rewards for failure.
“Labour has led calls for greater accountability, transparency and fairness in executive pay and for action to empower shareholders. But the Tory-led Government has u-turned and made an embarrassing climbdown on annual binding shareholder votes, which would have been a step in the right direction.”
1. Labour has backed the High Pay Commission proposals in full and called for employee representatives on remuneration committees; for firms to publish the ratio of the average pay of a worker to that of the highest paid executive. We are considering proposals for changing Board nomination committees so they are composed of shareholders; we would make fund managers publish information on how they vote on remuneration packages; and ask the Financial Reporting Council to produce an annual report on the state of corporate governance in Britain.
2. The BIS consultation on shareholder votes, which was issued in March 2012, specified that the government’s proposal was for “An annual binding vote on future remuneration policy”
This was repeated by Business Secretary Vince Cable in his oral Ministerial statement to the House of Commons on 14 March 2012, before the proposal was subsequently dropped by the government
3. Chuka Umunna speech on executive pay, 12 January 2012: http://www.labour.org.uk/labour-will-address-excessive-pay