Shareholders must put a stop to fat-cat pay, says Clegg

As bonus season kicks off, Deputy PM says he will give investors power to call executives to account

Executives will have to be clearer to shareholders how much they are paying themselves under plans to tackle eye-watering levels of executive pay. Nick Clegg, the Deputy Prime Minister, will promise tomorrow to "force companies to open up their books" so that investors "don't need an accountancy degree to decipher them".

Financial reports will have to spell out how money is divided up between shareholders, employees, executives and reinvestment in a move that ministers hope will persuade investors to curb eye-watering payouts to directors.

The Liberal Democrat leader will urge investors to use the opportunity to "throw their weight around so that the company improves". His intervention in the fat cats debate comes after David Cameron and Ed Miliband each sought to portray themselves as the only politician capable of tackling rewards for failure.

On the eve of the finance sector's bonus season, all parties are keen to avoid becoming the target of public anger at multimillion-pound payouts at a time when many people are struggling with job insecurity and rising living costs.

A week ago Mr Miliband argued: "If one of the big battlegrounds of British politics is going to be who is really going to take action on executive pay, I say, 'Bring it on'. I promise you they are not going to steal a march on us in this area."

But Mr Clegg will accuse Labour of ignoring Lib Dem warnings that bank lending levels were "recklessly irresponsible" at a time when "bad debts were growing". "There is a big difference between having strong views on bonus culture or excessive top pay and wanting real change in the practices and principles that guide corporate life," he will say in a speech tomorrow, hosted by the City of London and the CentreForum think tank.

"A bit of wrist slapping or moralising at the worst offenders will not be enough. This should not be a war of words, but a real contest of ideas about how to reform our economy," he will caution.

Mr Clegg will challenge more investors to behave like responsible business owners rather than "absentee landlords" and will confirm plans to introduce binding shareholder votes to curb executive pay. In support he will pledge to give shareholders more information to take an active interest in how firms are run.

Companies will have to produce a "report card" on how well investors' money has been spent, and on what. A policy will have to be set on so-called "golden parachute" payouts for departing chief executives, which could make it harder for large sums to be paid to under-performing bosses.

The pledge comes as Goldman Sachs set aside 44 per cent of almost £15bn generated in the first nine months of 2011 for staff pay, compared to the 39.3 per cent ratio in 2010, despite having what could be its worst-performing year for more than a decade.

An IoS survey of 200 City fund managers today reveals more than half of investors are "set to become more interventionist" on salaries for top executive pay.

It emerged last week that Antonio Horta-Osorio, the boss of the taxpayer-backed Lloyds Banking Group, would not take his £2.4m annual bonus for 2011 to reflect the "impact" his two-month leave of absence for severe sleep problems had had on the bank.

He is not the first to say no to a payout. At Barclays, Bob Diamond turned down bonuses worth more than £4m in 2008 and 2009, while John Varley declined more than £2.9m. Eric Daniels at Lloyds forwent a £2.3m payout in 2009, and Stephen Hester did not take £1.6m in 2008 and 2009 at RBS.

Mr Clegg will acknowledge that some companies have improved their levels of transparency, but will argue too many firms hide behind "impenetrable texts, obscuring rather than illuminating".

Start your day with The Independent, sign up for daily news emails
Sport
Tim Sherwood raises his hand after the 1-0 victory over Stoke
footballFormer Tottenham boss leads list of candidates to replace Neil Warnock
Arts and Entertainment
L to R: Hawkeye (Jeremy Renner), Captain America (Chris Evans) & Black Widow (Scarlett Johansson) in Avengers Assemble
film
News
Nigel Farage celebrates with a pint after early local election results in the Hoy and Helmet pub in South Benfleet in Essex
peopleHe has shaped British politics 'for good or ill'
News
news
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
News
i100
Travel
Suite dreams: the JW Marriott in Venice
travelChic new hotels in 2015
Arts and Entertainment
Sink the Pink's 2013 New Year's Eve party
musicFour of Britain's top DJs give their verdict on how to party into 2015
Sport
Yaya Sanogo, Mats Hummels, Troy Deeney and Adnan Januzaj
footballMost Premier League sides are after a striker, but here's a full run down of the ins and outs that could happen over the next month
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Selby Jennings: VP/SVP Credit Quant- NY- Investment Bank

Not specified: Selby Jennings: VP/SVP Credit Quant Top tier investment bank i...

Ashdown Group: Senior Marketing Executive- City of London, Old Street

£40000 - £43000 per annum + benefits: Ashdown Group: Senior Marketing Executiv...

Ashdown Group: Marketing Manager

£40000 - £43000 per annum + benefits: Ashdown Group: An international organisa...

Ashdown Group: Internal Recruiter -Rugby, Warwickshire

£25000 - £30000 per annum: Ashdown Group: Internal Recruiter -Rugby, Warwicksh...

Day In a Page

Aren’t you glad you didn’t say that? The worst wince-and-look-away quotes of the year

Aren’t you glad you didn’t say that?

The worst wince-and-look-away quotes of the year
Hollande's vanity project is on a high-speed track to the middle of nowhere

Vanity project on a high-speed track to nowhere

France’s TGV network has become mired in controversy
Sports Quiz of the Year

Sports Quiz of the Year

So, how closely were you paying attention during 2014?
Alexander Armstrong on insulting Mary Berry, his love of 'Bargain Hunt', and life as a llama farmer

Alexander Armstrong on insulting Mary Berry and his love of 'Bargain Hunt'

From Armstrong and Miller to Pointless
Sanchez helps Gunners hold on after Giroud's moment of madness

Sanchez helps Gunners hold on

Olivier Giroud's moment of madness nearly costs them
A Christmas without hope: Fears grow in Gaza that the conflict with Israel will soon reignite

Christmas without hope

Gaza fears grow that conflict with Israel will soon reignite
After 150 years, you can finally visit the grisliest museum in the country

The 'Black Museum'

After 150 years, you can finally visit Britain's grisliest museum
No ho-ho-hos with Nick Frost's badass Santa

No ho-ho-hos with Nick Frost's badass Santa

Doctor Who Christmas Special TV review
Chilly Christmas: Swimmers take festive dip for charity

Chilly Christmas

Swimmers dive into freezing British waters for charity
Veterans' hostel 'overwhelmed by kindness' for festive dinner

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect