In a speech yesterday likely to infuriate some trade unions and Old Labour supporters, Mr Byers insisted it was the job of shareholders, not the Government, to determine pay levels in the boardroom. "In the global economy we need to pay world-class salaries to world- class company directors and we should not shy away from saying that publicly," Mr Byers told an audience of institutional shareholders in the City. "We accept such an approach in relation to sports stars, so why don't we adopt the same attitude for directors? To attract world-class players, we need to pay at world- class levels."
Mr Byers appeared to back away from plans floated a week ago to clamp down on pay awards to privatised utility bosses by allowing regulators to take salary levels into account when setting price controls. After his speech at the Association of British Insurers, Mr Byers conceded that it might be difficult to persuade the public and some members of his own party that there should be no limits on boardroom pay.
But he maintained: "If British companies want to attract the best executives then we have to offer salaries which are world class." Mr Byers also took a sideswipe at those in the Labour movement who might criticise this "let it rip" approach to pay, saying: "There is a good old trade union maxim which is that you get the rate for the job. If we are living in a global economy and we want world-class managers, then they have to be paid the rate for the job."
The minister conceded, however, that there was concern in many quarters about executive pay that was not justified by performance and promised to give shareholders greater powers to block awards that were excessive. The Department of Trade and Industry will issue a consultative document proposing that companies be required to put boardroom pay awards to an annual vote at shareholders' meetings.
The document will also call for special procedures to allow shareholders to table resolutions about remuneration levels at annual meetings. Neither of these proposals would require legislation and could be implemented by amending the Stock Exchange's listing rules for publicly-quoted companies.
Ministers, led by Gordon Brown, the Chancellor, have been threatening a crackdown against so-called "fat cat" bosses for more than a year. Mr Byers denied retreating from the promised crackdown. "We have put in place a number of proposals which will ensure that we can offer world- class salaries but will crack down on those directors who under-perform and don't deserve large increases," he said.
John Monks, the TUC general secretary, welcomed the Government's announcement as a "first step" towards curbing excessive pay rises for directors, but added: "New measures to allow shareholder voting won't put an end to the fat cats. More realistic executive pay settlements would be much more likely if trade unions could sit on remuneration committees, and if companies were forced to publish detailed information on how pay is distributed."
Roger Lyons, general secretary of the Manufacturing Science and Finance union, said: "Ordinary working people are sick of being lectured on the need to work harder and accept lower pay rises as a consequence of an even more competitive world market, while their bosses award themselves kings' ransoms for mediocre performances."
News analysis, page 18
Business Outlook, page 19Reuse content