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To ask the Secretary of State for Business, Innovation and Skills what steps he is taking to ensure that companies do not draft director pay policies broadly to avoid annual binding votes on directors' pay as part of his proposals on executive pay.
The Government has published revised regulations which determine what must be included in the directors' remuneration report. For the first time, companies will be required to set out for every element of pay that a director could be entitled to how it supports the achievement of strategic objectives of the company, the maximum value that could be awarded, and performance measures that will be applied.
The binding vote on policy gives shareholders new powers to challenge companies that are not providing sufficient detail in their policy.
Companies will not be able to make payments outside the scope of the approved policy. It is therefore in companies' interests to be clear about their pay policy so that they can ensure they have proper shareholder approval for future payments.