EU to Boost Investor Power Over Executive Pay in Governance Plan

The European Commission will seek to give shareholders more power to control executive pay as part of measures to boost investors’ involvement in corporate governance.

Michel Barnier, the European Union’s financial services chief, will call next week for mandatory votes on compensation by shareholders at listed companies on pay policies, according to a document obtained by Bloomberg News. The commission will also seek to make institutional investors give more information on their voting records.

“Not all member states give shareholders the right to vote on remuneration policy,” according to the document. Also, pay information “disclosed by companies in different member states is not easily comparable.” The commission will present a draft law in 2013, according to the document.

Barnier’s push for more shareholder power over pay packages adds an additional front to an EU debate over curbs that should be placed on banker bonuses. Talks on a draft law to overhaul the 27-nation bloc’s bank capital rules have bogged down over demands from European Parliament legislators for a ban on bonuses that are larger than fixed pay. Barnier has said that increasing investor responsibilities could form part of a compromise deal.

Barnier’s pay proposals, to be unveiled on Dec. 12, form part of a broader plan to update the bloc’s corporate governance rules. Stefaan De Rynck, a spokesman for Barnier, declined to comment.

The commission is seeking to boost information listed companies must publish on their major shareholders, including data on business deals firms conduct with directors or controlling shareholders, according to the document.

The EU will also weigh a simplification of rules for cross- border mergers.

The plans will “modernize” EU law, the commission said today in a statement on its website. The measures “are fundamental to putting in place up to date legislation for sustainable and competitive companies.”

To contact the reporter on this story: Jim Brunsden in Brussels at jbrunsden@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net

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