EU's Barnier urges binding shareholder vote on executive pay

EurActiv ^ | 16 May 2012 | (EurActiv.com with Reuters)

[Olog-hai]

Shareholders should have the power to curb bosses' pay and set caps on executive bonuses, the European Union's top regulatory official said on today (16 May), 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. …

[wolfman23601]

Don’t the majority of shareholders have the power to do this anyway if they choose?

[texanred]

May times, but not always, shareholder votes take the form of non-binding resolutions or advice to the board. Boards can and do sometimes ignore these votes when it comes to their own compensation.