The consultation includes draft regulations setting out the proposed form and content of the directors' remuneration report and how shareholders can vote upon it.
If passed into law, the directors' remuneration report will be in two parts:
1 A future remuneration policy report, required when a shareholder binding vote is proposed, which will be at least every three years.
2 An implementation report, required annually and which will be subject to an advisory vote.
The draft regulations will apply to all quoted companies. It is proposed that the provisions will take effect for companies whose reporting years end after October 2013.
The reforms will, if adopted unchanged, also mean that companies will have to:
* Show executive pay as a single figure.
* Produce an annual statement saying whether performance targets are met.
* Set out their approach to exit payments to directors as part of their pay policy.
Phillip Davies, partner specialising in employment law at law firm Eversheds, said: "Discontent over top pay and bonuses has been growing for some time and at recent AGMs investor disquiet has been evident."
This followed discussions with business leaders, investors, academics, governance experts and a range of others, who agree there is a problem with rising executive pay, which is not linked to performance.
Under these proposals, companies would have to report each year on how they have responded to shareholder concerns and taken previous votes into account.
The objective, says the Government, is to promote better engagement between companies and those that invest in them, and create a stronger link between pay and performance.
