In the US, companies are already required to publish performance measurement comparisons. I believe we should do the same. UK companies must be able to attract and retain the best executives in the world to run their businesses and be able to pay world class pay for world class performance. But rewarding poor performance is bad for companies and shareholders. Linkage to performance is a matter for the members of the board's remuneration committee, but it is also rightly a matter of concern to shareholders.
Boards of directors face an obvious conflict of interest in relation to directors' remuneration.
This is an area where it is important that shareholders are actively engaged. This significant package of new disclosure rules will help to ensure that shareholders have the necessary information to enable them to assess a company's policy on boardroom pay. The Government continues to be concerned that many quoted companies are failing to respond adequately to the best practice recommendations on accountability. It will take a final decision on how to improve accountability on boardroom pay, including whether or not to introduce a compulsory vote on the board's remuneration report, in the light of the Company Law Review's wider recommendations on company law reform. Ahead of this there is of course nothing to stop institutional investors taking action now.