Byers to make bosses justify boardroom pay
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Your support makes all the difference.PROPOSALS to force businesses to justify boardroom pay rises by linking them to company performance are to be set out on Monday by Stephen Byers, the Secretary of State for Trade and Industry.
In a keynote speech to institutional investors in the City, Mr Byers will warn that the Government expects to see the relationship between pay and performance made explicit. He will also tell fund managers that they should be doing more to clamp down on excessive corporate pay awards.
Mr Byers will present the findings of a study commissioned from PriceWaterhouseCoopers, the accountancy and management consultancy group, showing that the link between pay and performance remains patchy. The survey will also question the level of shareholder disclosure in the area of pay and performance.
The thrust of Mr Byers' attack will be aimed at the privatised utilities, although he is not expected to refer directly to them by name. The Government is proposing to give regulatory authorities the power to curb boardroom pay in the water, electricity, telecoms and gas industries in its forthcoming Utilities Bill. The controversial plan has caused uproar, not least among the regulators themselves, because of the difficulty of imposing pay levels on private companies, many of which are now foreign-owned.
The task has been made even more complicated by the fact that many utilities now earn a significant chunk of their profits from non-regulated businesses. Nonetheless, ministers are determined that regulators should be able to take pay and performance into account when setting price controls for the utilities.
Philip Daubeney, chief executive of the Electricity Association, said the proposals had "the whiff of old Labour at its most populist". He also argued that pay packages for lead executives of companies such as National Grid and United Utilities were towards the bottom end of the league table.
He added that the energy market was now a competitive one and that just like the steel, supermarket or banking industries, shareholders were up to the challenge of complaining about excessive boardroom pay.
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