Powerful shareholder group ABI urges bank pay curbs
One of the UK's most influential shareholder groups, the Association of British Insurers (ABI) has called for a "fundamental shift" in bank pay levels.
A letter from the ABI's director general, Otto Thoresen, said the balance between employees and shareholders had become "inequitable".
It called on banks to ensure that executives are not rewarded even when the share price falls.
And it said banks should build capital by cutting pay, not just dividends.
"It can no longer be business as usual for this remuneration round," said Mr Thoresen.Limit discretion
His members "expect to see significantly lower bonus pools and individual awards given the current market circumstances."
The ABI said remuneration committees at banks should not use their discretion to discount factors outside of management's control when setting pay levels.
Instead, it argued, pay should mirror the impact of events on the shares held by insurance companies.
The group said that not only would pay restraint be in the interests of shareholders and of the company but that it could also benefit employees holding share options.
That is because, it claimed, shares would go up in value if banks cut back on excessive pay.'Tough action'
The calls come after the deputy prime minister, Nick Clegg, said the government is to publish new proposals to curb "unjustified and irresponsible" pay rewards in the private sector.
The deputy prime minister said ministers would announce plans to "get tough" on excessive boardroom pay in January and may legislate if necessary.
Among likely steps is widening the membership of remuneration committees, which set pay, to include workers.
Recent figures showed executive pay at the UK's top firms rose 50% last year.
Pay research firm Incomes Data Services said this increase took the average pay for a director of a FTSE 100 company to just short of £2.7m.