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Executives: Pay

Business, Innovation and Skills written question – answered on 28th June 2012.

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Photo of Chuka Umunna Chuka Umunna Shadow Secretary of State for Business, Innovation and Skills

To ask the Secretary of State for Business, Innovation and Skills pursuant to his oral statement of 20 June 2012, Official Report, column 867, on executive pay, for what reasons he has proposed a 50 per cent threshold for shareholders' advisory votes.

Photo of Norman Lamb Norman Lamb The Parliamentary Under-Secretary of State for Business, Innovation and Skills

Earlier this year a small number of investors suggested that the voting threshold for remuneration resolutions should be increased, but when the Government consulted on this most businesses and investors were not in favour. In particular they were concerned about the potentially disruptive effect of a large minority shareholder.

We have listened to these concerns and all remuneration resolutions will require a simple majority to pass. Recent shareholder activism has shown that shareholders can muster a 50% vote against where they have major concerns.

The Government also welcomes the Confederation of British Industries' call for companies to respond formally when a significant number of shareholders vote against a pay resolution—even where the vote is passed—and for this to be enshrined in the Corporate Governance Code.

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