EU proposes giving investors say on manager pay

Company managers across Europe may have to put their pay packets to a shareholder vote and introduce a quota for women executives under proposals from the European Commission announced on Tuesday. The European Union's executive Commission published its proposals as it considered how to boost shareholder involvement in the running of companies in the EU's 27 member states.
"We need companies' boards to be more effective and shareholders to fully assume their responsibilities," Michel Barnier, the European commissioner in charge of overhauling company rules, said in a statement. While banks would not be the only firms covered by any new law, rising pay in London's financial centre and elsewhere has increased pressure to widen last year's EU rules that cut the amount of cash bankers can receive in bonuses.
Governments around Europe, including Britain, have been trying to rally support among big shareholders to curb corporate pay. Despite popular support for new rules, ministers are reluctant to regulate employment contracts.
In the EU document outlining the reach of potential legislation, officials said "a mismatch between performance and executive directors' remuneration has... come to light" and they proposed a mandatory disclosure of pay and shareholder vote. The EU proposal, which is now open for public comment and could change before becoming law, also considers gender quotas to boost the number of women on management boards and limits on the number of jobs for non-executive directors.
EU officials estimate that roughly one in 10 seats on supervisory boards are occupied by women and say boosting this could stop inward-looking "group think". Pay voting practice varies across Europe. In Germany, shareholders do not get the chance to vote specifically on management pay, whereas in Britain, they typically do. But whereas the German government introduced a cap on management pay at 500,000 euros for Commerzbank while it remains dependent on state aid, there is no such limit in Britain.