Legislation - Byers provokes pay furore
Moves by trade secretary Stephen Byers to force executives’ pay deals to be put to an annual shareholder vote and be independently audited have been slammed by accountants and other financial experts.
‘Shareholders are the wrong people to judge remuneration as they don’t have the expertise or the interest,’ said Moira Conoley, a senior PricewaterhouseCoopers partner. ‘Remuneration committees have been established to carry out the role of controlling pay rises. The answer is therefore to review the role of these committees,’ she said.
Byers has said he will monitor forthcoming annual meetings for evidence of a more responsible approach from companies and shareholders, and that legislation to enforce annual votes on remuneration was a possibility.
Peter Butler, corporate focus director of Hermes, the UK’s largest pension fund, said if pay decisions were put to a shareholder vote, independent auditors should be involved.
‘If non-executive directors think a pay deal is reasonable but shareholders do not, an independent third party is needed to assemble the reasons why,’ he said.
Conoley said even auditors would not mitigate the proposals. ‘This would be a recipe for disaster,’ she said. ‘The only way forward is through the remuneration committee.’