More power to shareholders! The UK government’s watered-down plans to tackle executive pay rightly seek to strengthen shareholders’ hand in steering company policy with a binding – and not just advisory – vote on remuneration. But pay that is out of kilter with performance is a matter for shareholders and other stakeholders, not for politicians exploiting the public opprobrium they have fuelled. The trouble is that shareholders are remarkably silent on pay. This week’s blockage of Cairn Energy’s plans to award its chairman an extra £2.5m share incentive was a rare example of shareholder activism.But Whitehall should resist the urge to require, say, 75 per cent of shareholder votes to approve a plan. That might stir investors from their apathetic hibernation, but it could create more problems.
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