Companies would hold back part of bosses' pay for five years under Labour plans
Andrew Grice has been Political Editor of The Independent since 1998. He was previously Political Editor of The Sunday Times, where he worked for 10 years, and he has been a Westminster-based journalist since 1982. His column, Inside Politics, appears in The Independent each Saturday.
Tuesday 05 March 2013
Company bosses would not receive 30 per cent of their salary for five years under a future Labour Government in an attempt to encourage more long-term decision-making in British business.
Ed Balls, the shadow Chancellor, will today welcome the proposal to tackle undeserved high pay. It comes in a review for Labour on how to tackle the “short-term, fast-buck culture” in the business world. It has been carried out by Sir George Cox, the former director general of the right-wing Institute of Directors.
Sir George proposes that executive directors’ pay be deferred and based on their company’s five-year results. The Governance Code could also be amended so that non-executive received half their payments in shares, which would not vest for five years or until the director had left the board.
The plans, which include tougher rules on takeovers, are likely to feature in Labour’s manifesto at the 2015 general election. Another idea in the Cox review to be considered by Labour is a shake-up of capital gains tax (CGT) on shares to attract long-term investors. It could be tapered from a rate of 50 per cent in year one to 10 per cent after 10 years.
Sir George concluded that the pressure to deliver quick results has become an entrenched feature of the UK business environment. Such short-termism curtails ambition, long-term thinking and investment in research, new capabilities, products, training, recruitment and skills. It results in drastic cost-cutting and staff-shedding when revenue growth fails to match expectations. He said: “Only by overcoming short-termism will we grow the UK economy and ensure the UK can pay its way.”
Mr Balls said: “Where this Government’s indecision and short-termism has failed our economy, Labour will grasp the long-term challenge Sir George’s report sets out.”
- 1 The West has it totally wrong on Lee Kuan Yew
- 2 Watch: Man takes selfie every mile of 2,600 mile hike, creates amazing timelapse video
- 3 The day I starred in Only Fools and Horses
- 4 #FreeTheNipple: Women in Iceland bare breasts in solidarity with trolled student
- 5 Scientists have discovered a simple way to cook rice that dramatically cuts the calories
Ukip supporters are 55 or older, white and socially conservative, finds British Social Attitudes Report
JK Rowling responds to fan tweeting she 'can't see' Dumbledore being gay
Jeremy Clarkson sacked live: Alan Yentob 'wouldn't rule out' ex Top Gear host's BBC return
Revealed: Putin's army of pro-Kremlin bloggers
Germanwings plane crash: Co-pilot Andreas Lubitz wanted to 'do something people would remember him for'
The West has it totally wrong on Lee Kuan Yew
£6 per hour: Recruitment Genius: This is an exciting opportunity to join a gro...
Negotiable: Recruitment Genius: A Service Delivery Manager is required to join...
£12000 - £24000 per annum: Recruitment Genius: A opportunity has arisen for a ...
£32000 - £38000 per annum: Ashdown Group: A successful accountancy practice in...