UK - Corporate governance experts have welcomed the government's decision to resist drafting legislation to curb excessive boardroom pay for underperforming company bosses.
Trade and industry secretary Patricia Hewitt was scheduled to announce the DTI’s decision not to introduce laws to stamp out “rewards for failure” payoffs in a keynote speech at London’s Mansion House last night (Wednesday).
Investor lobby group Pensions Investment Research Consultants and the National Association of Pension Funds both said they were pleased the government had kept faith with self-regulation by shareholders.
An NAPF spokesman said: “More red tape is the last thing British business needs. The guidelines are there and where companies don’t adhere to them and don’t provide a suitable explanation for not doing so, we will raise our concerns.”
But the Trades Union Congress disagrees. Policy officer Janet Williamson said members were unconvinced that the problem of rewards for failure could be resolved without legislation. She said: “Whatever the government does, it needs to be done urgently and have a real impact on corporate practices. And we believe legislation would be effective in tackling rewards for failure.”
But Morley Fund Management Anita Skipper (pictured) believes the government is likely to “keep alive the threat of legislation”.
The department of trade and industry issued a consultation last June on boardroom pay – Rewards for Failure – to determine whether new laws were required to curtail excessive payoffs.
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