The Government yesterday published a discussion paper on quoted company pay for directors. It is the first Government consultation document on executive pay for over 10 years and has been produced with the political backdrop of concern over executive pay substantially increasing whereas average pay growth has recently stalled. There are also general issues on pay for performance and some investor concerns that pay issues seemingly lie unanswered by companies.

The paper surveys the current position in the UK and how other countries regulate pay. It then moves on to suggest ways in which greater disclosure might deal with these issues, including starker details on how much directors are paid, how pay and performance are linked, the link to pay across an organisation, greater emphasis on what pay will be rather than what it has already been and the process for setting executive pay.

However, the paper concedes that greater transparency is unlikely to provide all the answers. Shareholders are also being offered more power: including a binding vote on remuneration and direct shareholder involvement on nominations committees. A further suggestion is that employees would have a direct say on directors' pay through employee membership of the remuneration committee and even an employee vote on remuneration. There is also discussion about preventing plural membership of remuneration committees by directors. Finally, there are suggestions for greater transparency from remuneration consultants and other questions on the structure of pay, including whether claw-back should become compulsory, and the merits of greater deferral and alternative measures of performance.

The discussion paper can be accessed here.  Comments are requested by 25 November 2011, but any changes in this area are unlikely to be promoted ahead of recommendations from Professor Kay's review of UK equity markets next summer. Accordingly, no changes are likely to result in the near future.