guardian.co.uk,
David Batty, Saturday 7 January 2012
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| Chuka Umunna, the shadow business secretary, said there was no 'magic pill' to solve the problem of excessive executive pay. Photograph: Rex Features |
Labour has
called for better measures to encourage "more responsible and better
capitalism" to tackle excessive executive pay.
Shadow
business secretary Chuka Umunna said on Saturday that increasing transparency
was the key to ensuring executives were not perversely rewarded for poor
performance.
The
Conservatives are expected to announce their own policies on executive pay
later this weekend.
Umunna called
for simplified pay packages and the creation of a league table showing how much
more chief executives earn than their staff.
He told BBC
Radio 4's Today programme that excessive executive pay was
"systematic" of the "kind of capitalism that has grown up in the
country over the last 30 years".
"What
we need is a more responsible and better capitalism," he said.
He said
Labour accepted the full recommendations of the High Pay Commission and urged
ministers to do the same.
The
commission said the disparity between what executives and average workers earn
has been widening for many years.
The Labour
MP said that while there was not a "magic pill" to solve the problem
a variety of measures, including increased transparency, simplified
remuneration packages and the publication of pay ratios, would help create a
better pay culture.
Umunna
said: "Where you have pay awards that bear no relation to performance, but
also can be beyond what a company can sustain, it really undermines trust in
the whole system.
"It is
actually bad for business because you have perverse pay structures that of
course promotes the wrong kind of behaviour.
"I
think what people object to is rewards for failure and rewards that bear no
relation to performance.
"You
need to increase transparency, which is why we're saying you need to simplify
remuneration packages, so you've got one salary and one performance related
element.
"We
also need to know what people are actually being paid, which is why we have
said that we need to publish the ratio of the CEO, or the highest paid
executive in the company, to that of the median salary. And we would have the
business department publish a table of those companies with the biggest
ratios."
Labour also
wants to see an employee representative on the remuneration committee of every
company and an obligation on investors and pension fund managers to disclose
how they vote on remuneration packages.
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