The remuneration of company directors is primarily an issue for the owners of the business which employs them; the shareholders. However in the real world the majority of shares in quoted companies are held by institutional investors who have less interest in the moral aspects of excessive executive pay and more in the fiscal performance of the enterprise itself, and therefore tend to disregard the relatively low cost of executive pay in comparison with company results. So, for instance, Tom Laidlaw at Centrica grossed a package exceeding £4m last year despite a fairly lacklustre performance of the company.
Cable's proposition is nothing more than window dressing. Institutions will continue to ignore excessive executive pay deals and independent shareholders will continue to capture the headlines with their impotent minority protests.
Most of us recognise that executive pay and its rate of increase has become excessive in relation to company performance. To have any real chance of controlling this the remuneration committee system needs to be removed from the cosy club of sycophantic non-execs to a much broader based and accountable system. Executive bonuses should also be required to comply with clearly established principles of future company performance and corporate governance. Finally and most contentious of all, executive pay should be restricted to a multiple of the mean average of pay within the company. Whether this is a multiple of five, such as many muddled thinking left wing idealists might wish for, fifty or a hundred it does provide a framework to keep excessive executive pay under some sort of control.