Nov. 13 (Bloomberg) -- U.K. Business Secretary Vince Cable said he’ll introduce legislation if required to limit executive pay and expressed sympathy with anti-capitalist protesters who have set up tented camps in London’s financial district.
Some executive pay “causes a lot of public anger and indignation, and you know we’ve seen some of that spilling over into protests in recent weeks,” Cable said in an interview with BBC television today. “It does reflect a feeling that a small number of people have done extraordinarily well in the crisis, often undeservedly, and large numbers of other people who’ve played no part in causing the crisis have been hurt by it.”
Cable published a discussion paper two months ago that set out ways to help shareholders rein in excessive executive pay at underperforming companies, calling the current system “dysfunctional” and a failure of corporate governance.
“Most big companies are owned by individuals, they’re owned by pension funds and insurance companies,” Cable said on the BBC’s “Politics Show”. Those institutions need to be “active and socially responsible shareholders,” he said, adding that “if it does require legislation, of course we’ll introduce it.”
Options under consideration by Cable include giving shareholders a binding vote on pay and putting employees on company remuneration committees, according to the discussion paper. He’s also looking at stiffening reporting requirements for listed companies, including the publication of board members’ pay and details of performance-related bonuses.
Pay Commission Study
British directors’ salaries increased by 64 percent over the past decade, while the average year-end share price of FTSE 100 companies declined by 71 percent over the period, according to the High Pay Commission, a pressure group that pushes for curbs on top earners.
“The underlying problem which evidence has already demonstrated is that pay has far outstripped the performance of their companies and there’s no justification for that,” Cable said today.
Demonstrators have been camped outside St. Paul’s Cathedral and in Finsbury Square in London’s financial district since last month in imitation of the Occupy Wall Street campaign in New York, calling for greater economic equality. The St. Paul’s protest forced the temporary closure of the cathedral and led to the threat of legal action from the City of London Corporation, the district’s local government body.
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