Boardroom pay battle

It always comes as a shock to hear just how fast boardroom pay continues to rise despite the recession, and the severe curbs on just about everyone else. On the latest figures the average remuneration was up, astonishingly, by almost 50% last year, and represents an ever-growing multiple of what is earned by those who do most of the work to keep the country's businesses going.

Most people, however, will feel just a little sceptical about effective controls of any sort being placed on this bonanza, despite today's announcement by Deputy Prime Minister Nick Clegg that the Government intends to "get tough" and may legislate if necessary.

Not just because the coalition is Conservative dominated, although the Prime Minister too has criticised what he called "rewards for failure". If it really were possible, would Labour not have done something about it in its time in power. Yes, even New Labour?

However Business Secretary Vince Cable's department is looking at three main ideas: to make shareholder votes on directors' remuneration packages binding, rather than advisory as at present; to require big companies to include an employee representative on remuneration committees; and to require publication of the ratio of senior directors' pay to typical or median pay in the company, perhaps with a binding maximum.

Would they work? Remuneration packages can be complex,and ways to confer hidden benefits are liable to be devised. However I would applaud any attempt to tighten, and make more public, the methods by which remuneration is set. It is not just a matter for the company; there is a public interest in curbing the extent to which directors can look after their own interests while imposing austerity on everyone else. I do not believe the arguments that such packages are necessary to attract the right people. Abuse of power is abuse of power, in whatever context it takes place.