The Financial Times reports today that Michel Barnier, the European Commissioner for the Internal Market and Services, will propose that shareholders should get a binding vote on directors’ pay in quoted companies when he makes his final recommendations on corporate governance in listed companies in autumn 2012.
For the UK, the suggestion simply replicates the Government’s own proposals for a binding vote confirmed in the May 2012 Queen’s Speech.
In his interview with the FT, Mr Barnier also suggests that:
- Bank shareholders would vote to set a maximum ratio of bonus to salary. This follows the European Parliament’s proposal, in the context of Basel III, that the ratio be set at 1:1.
- And bank shareholders would also set a ratio for directors’ pay of the lowest to the highest earners in the company.
Mr Barnier’s suggestions, once made, would need to be approved by the European Parliament and Council.
In his FT interview, Mr Barnier comments on the term “shareholder spring”, coined recently to describe the shareholder votes against executive pay in the UK and the US:
“I like that expression – the shareholder spring – or even a regulation spring, a rule making spring.”