BRUSSELS Shareholders should have the power to curb bosses' pay and set caps on executive bonuses, the European Union's top regulatory official said on Wednesday, adding to pressure on banks and companies over excessive management pay deals.
The plan from Michel Barnier, the European Commissioner in charge of regulation, could pave the way for a pan-EU law next year that would give investors legal clout to take on Europe's executive elite over pay.
"For all listed companies, I support transparency and increased shareholder responsibility ... for example ... mandatory shareholder vote on remuneration," Barnier said in a statement.
There is mounting public anger at the widening gap between earnings of bankers and business executives and ordinary workers when many European economies are in recession and unemployment is high.
International regulators have already acted to try to restrain bonus payouts at banks, many of which were bailed out by taxpayers after the financial crisis.
Shareholders in Britain and the United States have also got more rebellious and voted down fat pay deals for bosses because of poor performance.
In the UK, for example, Andrew Moss stepped down as chief executive of Britain's second biggest insurer Aviva (AV.L) after shareholders voted against his pay deal.
Barnier, who has also campaigned for bonus curbs, said shareholders should be given the power to impose such limits.
"I would also like to see it made mandatory for shareholders of listed companies to decide on two key ratios for their company," he said in a statement.
"The ratio between the lowest (and) highest paid in the company, and the ratio between the fixed and variable parts of the remuneration," he said.
Barnier will play a central role in shaping pay rules as he is the official responsible for proposing and writing the first draft of EU laws to regulate areas such as pay.
He does, however, need to win the support of others in the European Commission, the EU's executive, before he can propose legislation, which then needs the backing of the bloc's 27 countries as well as its parliament before it can enter into force.
Barnier also said that he wanted to see the publication of pay packages for the top 20 or 30 executives of the biggest banks.
The European Parliament has already called for rules to cap the bonuses paid to bankers at the level of their salary.
(Reporting by John O'Donnell. Editing by Jane Merriman)