LONDON (Reuters) - Prime Minister David Cameron suggested on Sunday that legislation to curb excessive executive pay, including giving shareholders new voting powers, could be set out in the spring.
Cameron is keen to take charge of the agenda on so-called company “fat cat” pay when all major political parties recognise the need to respond to growing public anger over the widening gap between rich and poor.
Most Britons’ pay packets have seen little increase in the past few years while leaders of the biggest companies have continued to receive lavish pay rises, even when share prices have performed badly.
People are also struggling with rising prices, unemployment and government austerity measures to reduce a record peacetime budget deficit.
Cameron said concrete proposals may be set out in the spring when the Queen delivers a speech to parliament setting out the government’s plans for new laws.
“We have a Queen’s Speech coming up in the spring this year,” Cameron told BBC television.
“I do not want to pre-empt it, but it is very likely to include legislation on companies and on banking and on things like that, so there’s room to make legislative changes if that is necessary.”
Cameron said “everything is on the table,” when looking at blocking high rewards for failure.
He said it made “people’s blood boil” that between 1998 and 2010 the average pay of FTSE executives went up four times outstripping share prices and workers’ salaries.
He focused on giving shareholders a binding vote on company bosses’ pay packages, as well as pay-offs, instead of the current system of simply having advisory votes.
The prime minister also said remuneration committees needed to be reformed to stop the “merry-go-round” or “crony capitalism” where members who sit on each others boards indulge in backscratching when handing out each other’s pay rises.
Cameron, who is leader of the Conservative Party which is viewed as more friendly to business than its junior coalition partner the Liberal Democrats, was more elusive on other possible measures such as publishing pay ratios and whether an employee could sit on a remuneration committee.
When asked about latter, Cameron said: “I don’t rule that out, but I think that the key thing here is reforming the remuneration committees themselves.”
On publishing pay ratios within companies he said there were “some attractions to that” but it was “not the whole answer.”
Business Secretary Vince Cable is expected to publish the results of a consultation on bosses’ pay this month, including shareholders’ powers.
The Confederation of British Industry (CBI) business organisation gave a luke warm response to Cameron’s shareholder proposal.
“Binding shareholder votes would simply be shutting the stable door after the horse has bolted, as shareholders would only be voting after the problem has happened,” its Director-General John Cridland said in a statement.
The Labour Party, which set out its plans for “transparency, accountability and fairness” on pay on Saturday, accused the government of having done little since coming to power in May 2010.
“I am not interested in gimmicks, I‘m not interested in tokenism, I‘m interested in what will actually work to correct this market failure,” Cameron said.
Reporting by Avril Ormsby. Editing by Jane Merriman