Fidelity and LGIM back Cable crackdown on top pay

Fidelity and Legal & General IM (LGIM) have given their support to Vince Cable’s proposals to clamp down on boardroom pay and push for greater transparency.

In a speech to the House of Commons yesterday, Cable, the secretary of state for business innovation and skills, outlined plans to give shareholders new powers to rule over companies' pay deals.

The proposals suggested binding shareholder votes and clawbacks on executives' pay, with Cable saying shareholders should also take into account the difference between a company's best-paid and worst-paid workers.

Asset managers backed the move, with Sacha Sadan, director of corporate governance at LGIM, saying: "We welcome the Government's proposals in tackling executive pay. [...] executive pay needs to be simplified and focused on long-term rather that short-term performance - between 3-5 years."

Cable also announced a formal consultation on giving shareholders a legally binding vote on pay via companies' remuneration committees, suggesting a minimum of 75% support should be required for a vote to be successful.

"The introduction of a binding vote on pay is a particularly welcome move. Our goal remains to ensure that shareholders are given a greater opportunity to have a real say on directors' variable pay," said Fidelity Worldwide CIO, equities, Dominic Rossi.

"We believe that this threshold is warranted to ensure that companies consult widely with shareholders prior to a vote. 75% approval gives companies a clear mandate and the need for a clear majority also encourages all shareholders to express their views as every vote, either for or against, will be important," added Rossi.