Wednesday, 9 November 2011

Nom comm reform

I've blogged a bit recently about the importance of remuneration committee reform, and in particular the idea of opening up membership to employees. Of course another way of tackling this issue could be to go through nominations committees, and thus affect who ends up on boards. Notably this idea got a nod last week from Sir George Young in response to a question from Angela Eagle. See Hansard here, text below:
Finally, on executive pay, it is worth reminding the House that the average chief executive of a FTSE 100 company earned 47 times the amount earned by the average employee in 1998 and 115 times that amount in 2009, so the gap actually widened under the last Labour Government. I agree with the hon. Lady that there is an unsustainable disconnect between how our largest listed companies perform and the rewards that are on offer. Concern on that comes not just from Government, but from investors, business groups and others. We are considering ways to reform remuneration committees and to empower shareholders, for example by making shareholder votes on pay binding and ensuring that there is shareholder representation on nomination boards. We are consulting on a number of issues, but at the end of the day, it is up to shareholders rather than the Government to determine executive pay.
That looks like a bit of a score for Paul Myners, who has pushed the idea, along with Cevian, the asset manager he now works for.

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