We will 'get tough' on excessive boardroom pay - Clegg
- 4 December 2011
- From the section UK Politics
The government is to publish new proposals to curb "unjustified and irresponsible" pay rewards in the private sector, Nick Clegg has said.
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.
Mr Clegg told the BBC's Andrew Marr that these figures were a "real slap in the face" for workers on middle and low incomes, who are seeing their pay frozen.
The government should not be setting pay rates, Mr Clegg stressed, while making clear he supported top executives being well rewarded if their companies were successful.
But he said "greater transparency" was needed over the process of setting pay and that top bosses should not be rewarded for poor performance.
"We need to get tough on irresponsible and unjustified behaviour of top remuneration of executives in the private sector," he said.
"What I abhor is people getting paid bucket loads of cash in difficult times for failure."
Remuneration committees, the bodies which set the pay of top executives, were too often "closed shops", resembling "old boys" clubs, and he wanted to "break open" membership of these bodies.
Labour want workers to have a seat on remuneration committees to ensure their voices are heard and Mr Clegg suggested this was one area being looked at.
Business Secretary Vince Cable announced a consultation on how executive pay is determined and measures to empower shareholders at September's Lib Dem conference.
Among ideas floated were requiring companies to set out in the detail the criteria for pay awards.
While the Lib Dems have been keen to act in this area, the Conservatives have been seen as more reluctant although Prime Minister David Cameron has also attacked so-called "rewards for failure".
Mr Clegg's comments came after it emerged that Lloyds Banking Group is looking to "claw back" up to half of the £1.45m bonus it awarded to its former chief executive Eric Daniels.
The Daily Telegraph reported lawyers have told Mr Daniels and other executives Lloyds is considering withholding part of their bonuses after it announced a £3.9bn loss for the first nine months of 2011.
Although Chancellor George Osborne increased the bank levy in last week's Autumn Statement, the unions say the public sector is bearing the brunt of measures to rebalance the public finances with workers facing a new 1% cap on pay rises after the current two-year pay freeze ends in the Spring.
Mr Clegg said the public sector could not be seen to do "all the heavy lifting" when it came to the government's austerity programme and that people "in a sense living by completely different rules in the private sector" should also be held to account".
As it was essential that the country did not become "divided" in these tough times, he said the coalition must "redouble its efforts" to show its deficit cutting plan was as "fair as possible".
He also suggested he would support well-off pensioners forfeiting their current entitlements to free TV licences and bus passes in future - something that the government has rejected in the past.