A coalition of fund mangers is to take a tougher line on executive pay deals this year in a bid to head off government intervention aimed at tackling excessive remuneration deals, according to The Sunday Times.
The paper says that fund managers believe that government action could undermine shareholder value. An anonymous fund manager is reported saying that government policy could threaten the ability of UK companies to attract global talent, an argument frequently used to counter the need for a general policy on executive pay.
The group is said to include Fidelity Worldwide Investment and Aberdeen Asset Management, as well as 11 others which met in January to develop an agreed policy. The agreement was reached at a meeting of the Investment Association.
Executive pay is one of the issues addressed in a government green paper discussion document on corporate governance published in November last year. A good deal of the paper is devoted to executive pay.
One proposal is to give shareholders a binding vote on pay packages, a transformation of the current procedure in which votes are only advisory.
There are also proposals requiring remuneration committees to consult with shareholders and the wider workforce on pay packages.
A third headline proposal would see companies publish pay ratios comparing chief executive pay with that of average workers.