The consultation by the Department of Business, Innovation and Skills on executive pay offers a “golden opportunity” to increase the powers of shareholders, says Fidelity Worldwide Investment.
The company is pushing for a binding vote on executive pay requiring a super-majority vote, and said this would help to restore public confidence, which has been damaged by the perception that executive pay is excessive and unlinked to company performance.
“There is already growing evidence that shareholders are becoming more engaged in this area,” said Dominic Rossi, Fidelity's chief investment officer for equities. “The historic Citigroup vote for 'Say on Pay' recently gave a stinging rebuke to its Board. The news from Barclays highlights its more assertive shareholder base.”
Rossi said shareholders should employ the new powers to ensure executive pay reflects company profits; that wealth is balanced between employees and shareholders; that the company is focused on long-term performance; and that the interests of executives and shareholders are aligned.
He added that if shareholders failed in these aims, “we must expect market unfriendly solutions to the remuneration debate led by politicians and regulators instead”.
©2012 funds europe