Row to hot up as Cable gets on the fat cats' tails
The political row over giant pay deals will step up a gear this week when Vince Cable finally sets out his plans to rein in fat-cat remuneration.
The Business Secretary's intention to clamp down on unwarranted bonuses comes as Royal Bank of Scotland prepares to pay its investment bankers up to £2.5bn. The figure, equal to nearly £140,000 a head, includes salaries, benefits and bonuses reported to be worth £500m.
RBS, which is 83 per cent-owned by the taxpayer after a £45bn bailout in 2008, is paying its investment bankers less than at rival banks, such as Goldman Sachs and Barclays, but the sums are still enough to inflame ministers. David Cameron and George Osborne have led calls for restraint from the financial services sector while pay freezes remain commonplace in Austerity Britain and unemployment continues to rise.
Stephen Hester, RBS's chief executive, is in line for a bonus of more than £1m. The bank's share price has been buffeted by the eurozone crisis but Hester has still taken strides to shrink its balance sheet with asset disposals such as the £4.7bn sale of the bank's aircraft-leasing arm last week. Hester waived his bonus two years ago.
Cable's measures to crackdown on spiralling pay include forcing companies to publish a single figure for the boss's annual pay as part of simplifying hard-to-understand annual reports. He also wants shareholder votes on a firm's pay report to become legally binding. It is currently advisory, meaning that companies can ignore their investors' wishes if they please.
But a plan to appoint an employee representative to the board to closely monitor directors' activities has been put on ice, despite an appeal from the Trades Union Congress.
"Introducing worker representation would bring a much-needed dose of economic reality to company pay decisions," said TUC General Secretary Brendan Barber. "It already operates successfully across much of Europe and it's about time the UK caught up."
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