Executives at listed companies may be forced to put their bonus packages to a shareholder vote under measures proposed by the European Union today.
The European Commission plans to toughen management pay rules, increase the number of female directors, and make senior managers responsible for a company’s risk-management strategy. It is seeking outside comment on the proposals and companies have until July 22 to respond.
“Above all we need company boards to be more effective and shareholders to fully assume their responsibilities,” Michel Barnier, the EU’s financial services commissioner, said in an e-mailed statement today.
The move comes as companies are increasing pay for top managers. Old Mutual Plc, the third-biggest insurer in the U.K. by market value, yesterday increased Chief Executive Officer Julian Roberts’s pay by 13 percent after the company’s full-year loss narrowed.
“The commission should look closely at the lessons learnt from the financial crisis, but only apply new measures if they are appropriate to all listed companies,” Matthew Fell, director for competitive markets for the Confederation of British Industry in London, said in an e-mailed statement.
A German shareholder-protection group said last week Daimler AG’s executive pay packages lacked transparency and that it planned to challenge them at the company’s April 13 shareholders’ meeting.
“Corporate governance is a product of local regulation and culture, and balances the need for growth with the need to manage risk,” Mark Wippell, a corporate law partner at Allen & Overy LLP, a law firm, said in an e-mailed statement.