March 10 (Bloomberg) -- The European Commission will propose boosting shareholder’s power to control executive pay at listed companies, in a move that it says could curtail excessive awards.
Michel Barnier, the European Union’s financial services chief, will call for shareholders to vote on pay packages at publicly traded firms in the 28-nation bloc, according to Chantal Hughes, his spokeswoman. The so-called “say on pay” measure takes inspiration from similar initiatives in EU nations including Sweden and Belgium, she said in an e-mail. Barnier intends to publish the proposals within weeks, she said.
The plan will make it harder for “executives to get paid excessive or unjustified amounts despite weak performance by the company,” Hughes said. The move is part of a broader EU push to boost shareholder engagement as a means of improving corporate governance and business strategy in Europe, she said.
Barnier’s push for more shareholder power over remuneration adds to EU moves to rein in variable pay. Since the outbreak of the 2008 financial crisis, the EU has agreed to ban banker bonuses of more than twice fixed pay, and approved pay rules for managers of hedge funds and other EU investment vehicles known as Undertakings for Collective Investment in Transferable Securities, or UCITS.
The U.K. has begun a legal challenge against the banker bonus cap and is among a group of nations seeking changes to a deal reached last month on UCITS.
Barnier’s plans for listed companies don’t seek to impose any caps on pay and are focused on boosting shareholder awareness and oversight, Hughes said.
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