Opinion Piece

Author:Mr David Green
Profession:Charles Russell LLP

Shareholder Spring

The current recession has led to a refocusing, or some may say witch hunt, against various groups of individuals who seem to be unfairly benefiting despite the recession. The initial target was, of course, the bankers. Newspaper campaigns have moved on to targeting those who seek to avoid, albeit legally, tax. Directors' remuneration has become another target. Shareholders have been voting down proposed remuneration packages for directors at annual general meetings and there is a general perception that directors are being rewarded for mere attendance at work and not for exceptional performance. This shareholder spring is not just a UK phenomenon. For example, the new French government has announced plans to cap the pay of top executives at state controlled companies to a maximum of twenty times that of their lowest paid employee. The coalition government clearly sees executive pay as a potential vote winner and has now announced plans to deal with this issue.

The government's approach, as outlined by Vince Cable and now added in to the Enterprise and Regulatory Reform Bill, is to introduce a binding shareholder vote on pay policy which will be revisited every three years. A simple majority...

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