January 25, 2012
UK Looks to Dramatically Overhaul Executive Pay: Binding Say-on-Pay for Starters
– Broc Romanek, CompensationStandards.com
As I’ve blogged before, the United Kingdom has been on a path to revise its executive compensation laws to rein in excessive pay. Yesterday, the UK announced a slew of proposals that would push the envelope in the executive pay area – here are the proposals (or the closest thing I could find to them), as well as British Business Secretary Vince Cable’s oral statement, a summary of responses to the related discussion paper and a comparison with the High Pay Commission’s report that came out a few months ago (note that the HPC is not an independent commission; it’s a left wing charity). And here is a Towers Watson memo, ISS blog and NY Times article discussing these proposals.
The proposed major changes include:
– Say-on-pay votes would be binding
– Approval threshold increased to 75% from 50%
– At least two compensation committee members would have no prior board experience
– Clawbacks of bonuses if executives failed
– Enhanced disclosures
It’s notable that Britain’s opposition party is quoted in media reports as criticizing these proposals as not going far enough! Is this looking at tea leaves for the US? Remember Australia’s new “two strikes” law…