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UK Business Secretary Vincent Cable has been called to parliament today to discuss the government’s plans to regulate executive pay, the Telegraph reports.”We cannot accept top pay rising at five times average workers’ pay as we did last year,” Cable told parliament.
Cable was called to parliament by speaker John Bercow after shadow secretary complained that the government was announcing the plan to a think tank in a bid to escape parliamentary scrutiny.
So what’s in the plan? Let’s take a look.
The most important aspect of the plan is to give shareholders a concrete vote in executive pay — shareholders would be able to have a binding vote on executive contracts over a year long and new executive pay deals greater than a year’s salary.
Cable also hopes to extend the independent Financial Reporting Council’s powers to “withhold or recoup” pay from under-performing companies. Cable additionally made demands that executive pay deals be simplified and called for greater diversity on boards.
Crucially, Cable did not heed calls for employees to be given a concrete say in executive pay, and, as the Guardian notes, he did not say how much is “too much” pay at the executive level.
Indeed, the Business Secretary himself admitted it was far from a “magic bullet” for the problem of executive pay.
Opposition leaders called the plan too soft, but UK business owners are not too pleased with the announcement either. London Loves Business spoke to a number with uniformly negative opinions. “You’ve got to wonder what planet Vince is really from. The whole thing is just plain ridiculous,” said one entrepreneur.