Connecting to LinkedIn...


PwC comments on executive pay proposals announced by Vince Cable

PwC comments on executive pay proposals announced by Vince Cable

Sean O'Hare, remuneration partner at PwC, said:

"The measures announced today represent the most significant recasting of executive pay rules for a decade.  Anyone who thinks pay does not reflect what shareholders want should feel satisfied - shareholders now clearly have all of the information and tools at their disposal to hold Remuneration Committees to account.   No where else in the world will executives see their pay subject to such rigorous checks and scrutiny.    

"The most significant change is the binding vote for shareholders on future pay.  This will force much greater engagement between corporates and shareholders, as no one will want the figures subject to vote to come as a surprise.   It's true shareholders will be loathe to use the binding vote but for this reason they'll want to be involved beforehand in the decision.

"In strengthening the hand of institutional shareholders, the binding vote will put the spotlight on the proxy agencies who advise them. These mainly US entities sit outside UK regulation so there could be questions around accountability if they're to have much more influence on UK PLC.  We may see their role examined as part of the Kay review.

"Requiring remuneration committees to justify the link between pay and performance is no bad thing. However, given the varying timeframes and performance periods of executive pay programmes, a single figure for executive pay may end up creating more confusion than clarity.

"It is no surprise that claw-back will become compulsory for all companies following the adoption of this measure by regulators in the financial services sector.

"Given the current political environment, business really can't complain about what's on the table.  The Government has listened to the main concerns and there's nothing onerous enough to affect a company's willingness to list in the UK.   However, there's much work afoot for corporates in simplifying and communicating the information required.

"Whether the changes have any impact on actual pay levels is another matter.  Certainly anyone expecting to see a dramatic drop in pay levels is likely to be disappointed. but the measures should help build public confidence that executive pay decisions are subject to proper scrutiny and transparent."


Articles similar to

Articles similar to