British firms outside of the financial sector should be protected from proposed changes to the bonus culture to prevent work being moved overseas, the Institute of Directors (IoD) has warned.
The IoD said the measures to tackle excessive bonuses, laid out in David Walker’s review, were too draconian to be applied to businesses outside of the financial sector.
Walker’s review called for at least half of annual bonuses for executives to be staged over a minimum of three years, and to include a long-term incentive scheme.
The IoD will, however, support deferred bonus schemes and the right of companies to claw back payments in schemes where the payout is variable.
Miles Templeton, director general of the IoD, told the Times: “It is important for the Financial Reporting Council to think carefully about the applicability of the Walker review’s recommendations to the combined code. Many of the proposals would not represent best practice for non financial companies.”
Meanwhile the chancellor has held a series of private meetings with bank bosses asking them to curb staff bonuses this year.
A banker close to the talks told the Times the government was hoping that self-regulation would avoid any need for government intervention in the run up to the general election next year.
The banker said: “Bonuses and elections are a potent cocktail. The government knows it is the last thing it wants on its plate.”
Bankers have also warned that the government intends to delay the bonuses of staff at the two state-controlled banks, RBS and Lloyds Banking Group, until after June 2010.