The Confederation of British Industry proposed a set of best practice guidelines that also include one year rolling contracts for executives, part-payment in shares and regular contractual reviews.
The report comes in response to the Department of Trade and Industry’s consultation on rewards for failure following a series of ‘fat cat’ pay scandals culminating in a revolt at GlaxoSmithKline in May as angry investors rejected chief executive Jean Pierre Garnier’s ‘golden parachute’.
CBI director general Digby Jones said it was vital for the business community to restore Britain’s reputation by creating a ‘flexible and transparent framework’ for executive pay.
‘The standing of business is at stake and must be tackled. This new framework balances flexibility with a major change of approach from passive to pro-active.’
But he added that the government must not legislate on pay and that his proposals were only guidelines for best practice.
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