CBI hits out at shareholder say on director pay

The CBI attacked goverment proposals to clamp down on executive pay yesterday even as opposition to Barclays boss Bob Diamond's pay package mounted.

After emphasising that financial rewards must be linked to performance, Kaja Hall, the CBI's chief policy officer, came out against government efforts to strengthen that link.

"The Government's proposals unhelpfully confuse the roles of shareholders and management. If these responsibilities are blurred then the result would be shareholders micro-managing companies, which would lead to slower and less effective decision-making," she said.

Last month, Vince Cable's Department for Business, Innovation and Skills launched a consultation which proposed giving company shareholders greater influence over executive pay by offering them enhanced voting rights. The changes would require boards to achieve a "supermajority" of 50 to 75 per cent for pay and bonuses to be approved.

"We absolutely do not accept the myth of a 'cosy club' of business leaders setting pay for each other... Recent claims that there is no link between executive pay and company performance are misleading," Ms Hall added.