Executive pay proposals 'are great for shareholders'

The Institute of Directors (IoD) has welcomed the government's proposals to introduce binding votes for shareholders with regard to executive pay.

Business secretary Vince Cable announced the measures yesterday (June 20th) and it is hoped it will curb excess pay when the economy is fragile, as well as increasing transparency.

Director-general of the IoD Simon Walker claimed the move will allow shareholders to assert their interests as owners of the firm.

He emphasised that this will not be about having a fight over remuneration, but about allowing people who own the company to have a real say with regard to performance over long-term objectives.

"The government's proposals reflect a reasonable balance between improving the accountability of executive pay and encouraging a longer-term business perspective," the expert commented.

Mr Walker added that this will rein in the trend of rewards that are not justified by performance "and in so doing, they will help to strengthen the reputation and practice of business".