Danny Blum, partner and employee incentives expert at Eversheds, has commented on the potential for UK rules on executive pay to be toughened.
According to Blum, the messages coming from the government are confusing, as the vast majority of remuneration committees appear to be taking a much more focused approach to linking relevant performance to reward as are investors and investor representatives.
He added that investor representatives are frequently rejecting attempts by companies to retain discretion within their pay policy, and called the suggestion that there should be enhanced consultation with employees ‘bizarre’.
Blum said: ‘Ultimately, it is investors who are likely to be most concerned and they will have opportunity to vote on pay policy and actual pay under the new regulations and to influence policy by means of the extensive consultations with companies that are ongoing.
‘Although there were some notable exceptions, the evidence shows that the so-called “shareholder spring” is a misnomer. If the government’s agenda is to restrict relative pay within an organisation, this should be made clearer and many will question whether, in a free economy, it is the government’s role to pursue this agenda.’