EU proposes giving investors say on manager pay

* Commission turns to shareholders to put brake on pay
* Rising pay at banks increases pressure for action

* Officials consider quotas to boost women’s role on boards

By John O’Donnell

BRUSSELS, April 5 (Reuters) – Company managers across Europe
may have to put their pay packets to a shareholder vote and to
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,” said
Michel Barnier, the European commissioner in charge of
overhauling company rules.

While banks would not be the only firms covered by any new
law, rising pay in London’s financial centre and elsewhere has
added to 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 curtail
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 shareholder vote and disclosure of

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”.

“There is also evidence that women have different leadership
styles, attend more board meetings and have a positive impact on
the collective intelligence of a group,” the authors of the
proposal write.

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 while the German government introduced a cap on
management pay at 500,000 euros for Commerzbank (CBKG.DE: Quote, Profile, Research) while
it remains dependent on state aid, there is no such limit in

The new head of Lloyds (LLOY.L: Quote, Profile, Research), which is 40 percent owned
by the British state, recently struck a deal which could give
him up to 10 million pounds ($16 million) over the next three

And the head of state-owned Royal Bank of Scotland (RBS.L: Quote, Profile, Research),
Stephen Hester, could get up to 4.5 million pounds in shares
under a long-term incentive plan. [ID:nLDE72724Z]

While some shareholders have actively campaigned for
restraint, many prefer to avoid raising the issue.
($1=.6204 Pound)
(Editing by Hans Peters)

EU proposes giving investors say on manager pay