Discontent with 'fat cats' has spilled over from the High Street
into the boardroom as shareholders have begun to rebel against what
are perceived as extortionate rates of pay.
Similar controversy follows 'golden parachute' deals that reward
failing bosses who are forced out of office early. One such deal
upset shareholders of GlaxoSmithKline last year, forcing directors
to withdraw a two-year rolling contract with CEO Jean-Pierre
Garnier that could have awarded him almost £5 million in the event
of his leaving the company early.
Only last week, senior executives at Standard Life faced
criticism for awarding themselves massive bonuses, despite the
insurance company announcing cuts in policy payouts over the last
two years.
The Commission's announcement is not a direct result of these
concerns, but part of an overhaul of EU company law which began in
May last year.
The Action Plan contains a set of initiatives aimed at
strengthening shareholders' rights, reinforcing protection for
employees and creditors, increasing the efficiency and
competitiveness of European business and boosting confidence on
capital markets.
Public consultation on the Action Plan as a whole, which ended
in mid-September 2003, revealed consensus behind its main measures.
The Commission is now committed to further open consultation on
each of those key measures and the consultation exercise on
directors' remuneration announced yesterday is the first of several
arising from the Action Plan.
The Action Plan recognises the need for shareholders to be able
to appreciate fully the relationship between the past and future
performance of companies and directors' pay and to make decisions
on aspects of remuneration linked to the share price such as share
options for directors.
The Commission intends to adopt a Recommendation on directors'
remuneration by September 2004.
Comments on the consultation should be submitted by 12th April
2004.
