After reaching an agreement last week to cap bankers’ bonuses, the European Union plans to rein in the salaries of managers and board members of all stock exchange listed companies across the EU block.
The European Commission will present by the end of this year a comprehensive package of measures not only to curb the salaries, bonuses and severance pay, but also to introduce more transparency about the remunerations of top executives, EU commissioner in charge of the internal market Michel Barnier said today.
The shareholders of all listed companies should have the possibility to decide the level of executive salaries, including the severance pay known as “golden handshake”, Barnier said.
New transparency regulations envisaged by the commission will require companies to publish information on salaries and bonuses of managers and board members in an annual report.
This will make it possible for the public and the investors to compare different companies, the commissioner told the ‘Frankfurter Allgemeine Sonntagszeitung’.
The EU finance ministers agreed in principle last Tuesday to cap bankers’ bonus to the level of annual salary and to double that amount if a majority of the bank’s shareholders approve. However, they postponed a final decision to give Britain some more time to overcome its misgivings about the plan and join the rest of the EU.
As the only member-state, Britain opposed the bonus cut plan negotiated by representatives of the European Parliament and the EU council of ministers, expressing fears that it could damage London’s financial centre.
Barnier said legislative measures are needed to curb executive salaries and bonuses because the remunerations of some of the managers “are not at all consistent with a fair distribution of income.”
The overall aim is to “return to the principles of a social market economy,” the commissioner said. Salary excesses should come to an end not only at the banks.
“Companies should not become self-service shops for the managers. Therefore, we should give back to the shareholders the power in a company,” he said.
Barnier expressed optimism that Britain’s opposition to the deal on bankers’ bonuses could be overcome and the country will eventually join the rest of the EU. He offered to make some compromises to accommodate Britain’s concerns, but insisted that there will not be any changes to the basic agreement to curb bonuses.
“We must stick to the basic principles agreed. After all, almost all EU finance ministers have supported it,” he said.
Public support to curb executive salaries and bonuses in the EU has been growing since the Swiss voters in a referendum last Sunday overwhelmingly supported proposals to impose strict control over remunerations of managers and to give the shareholders a greater say in deciding the level of salaries and bonuses.