In recent weeks shareholders have been exercising considerable muscle in relation to the approval – or not – of boardroom pay. The effect has been quite astounding, and some of the UK’s largest businesses have lost leaders. Andrew Moss left Aviva; David Brennan left AstraZeneca; Sly Bailey left Trinity Mirror; and, more recently, shareholders of Tullow Oil and Cookson have indicated that they are not satisfi ed with the companies’ remuneration reports.

The spring issue of this publication outlined the proposals put forward by Vince Cable on 23 January 2012 concerning restrictions in relation to executive pay. Since then, there have been two main developments: fi rst, the Queen’s Speech has confi rmed that a bill will be introduced to regulate matters around executive pay, and second, the ‘shareholder spring’ has sprung.

A major plank of Cable’s proposals is related to an increase in relation to shareholder power. The question must be asked, however, whether this is now necessary in view of the fact that shareholders appear to be taking matters into their own hands.

The details of any proposed bill are still unclear, but the proposals made earlier this year and the steps taken in the Queen’s Speech have continued to highlight this issue and it appears that shareholders are acting where they consider it to be necessary. Cable is likely to see this as being vindication of the steps he has taken to date, and thus is likely to hasten regulation in this area. Given the current economic climate, one can only hope that the regulation is light in touch and does not impose any undue burdens upon businesses whose attentions need to be directed towards the bottom line.

In addition to this, a number of companies and remuneration committees are now running with the idea of ‘clawback’ provisions within service agreements or bonus arrangements. This allows businesses to recover bonuses paid should performance of individuals not continue at the level required. This provides further evidence of companies being cognisant of the need to safeguard the position around boardroom pay.

Hopefully, with shareholders taking matters into their own hands, this will mean that regulation, which is now likely, will stay on the political tightrope to the extent that on the one hand, Cable is seen to be doing something in relation to boardroom excess, but on the other hand, regulation does not impose a signifi cant burden on business.