· 1 min read · Features

Queen's Speech 2012 analysis: success of executive pay proposals 'remain to be seen'

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The Government confirmed yesterday in the Queen’s Speech it would propose a bill would to make shareholder votes on directors’ pay binding.

But it fell short on proposals discussed over the last year, including one that would have have forced companies to achieve a 75%majority to approve pay packages.

Sean O'Hare, remuneration partner at PwC, said: "Those hoping for clarity on executive pay in the Queen's Speech will be disappointed as despite confirmation that there will be primary legislation, no details have been provided.

"Companies still have everything to play for in seeking to influence BIS before draft proposals are submitted before the House in late June.

"The proposals already laid out by business secretary Vince Cable amount to the most significant shift in the governance of executive pay for a decade. Shareholders now clearly have all of the information and tools at their disposal to hold Remuneration Committees to account and we are already seeing them starting to exercise their power more.

"Key areas under review are the three flagged shareholder votes: on forward looking policy (a binding vote); on remuneration report for the year just ended; and on termination payments. The one that attracted less corporate support was on termination payments and it will be interesting to see if the Secretary of State dilutes his initial proposals.

"Whether the proposals will have any impact on actual pay levels remains to be seen. Anyone expecting a dramatic drop in pay levels is likely to be disappointed, but the measures should help build public confidence that executive pay decisions are transparent and subject to proper scrutiny."