Shareholders to have veto right on directors’ pay

Trade and Industry Secretary Patricia Hewitt has announced new measures to
give shareholders more of a say in how company directors are remunerated.

Under the new rules shareholders will be able to veto executive pay rises
and hold oblig- atory annual ballots, where they can vote on remuneration
policy.

The Government is hoping to appease growing public anger over directors who
receive huge pay-offs despite running failing companies.

Firms will still have the final decision on directors’ remuneration but the
Government feels they are unlikely to force through unpopular deals.

Companies will also have to report the way rewards are linked to
performance.

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Mark Childs, HRdirector of Fidelity Investments, said, "It’s a backward
and constraining step for innovation.

"If HRdirectors are to attract talented, capable staff they have to be
allowed to offer terms that are attractive and have a degree of
protection."