Cable under fire over executive pay plans Vince Cable has come under fire from the CBI employers" group and corporate chiefs as he outlined proposals to give shareholders in quoted companies an annual binding vote on future executive pay policy. FTSE bosses are especially alarmed by the business secretary's proposal that boards must achieve a "supermajority" of between 50 and 75 per cent for the policy to be approved, which they fear would hand power to a "Machiavellian minority" of shareholders. Mr Cable, launching a consultation on his proposals on Wednesday, said he had "no problem with business celebrating success and rewarding talent." But he added: "I have heard frustration from all circles that directors" pay goes up when times are good, and yet it still goes up when performance is poor. I want shareholders to feel empowered to prevent rewards for mediocrity or failure. Ructions between the coalition and big business have calmed down after spats last month over bankers" pay and the stripping of a knighthood from Fred Goodwin, former Royal Bank of Scotland chief executive. But one FTSE 100 chairman described the supermajority idea as "completely insane." He added: "My sense is that No 10 will realise that 50 per cent is as far as they want to go." A 75 per cent threshold was first proposed by Fidelity Worldwide Investment. Mr Cable's document does not specify a figure, but says the government "proposes to increase the level of shareholder support that should be required" beyond a straight majority for votes on future pay policy. Recognising that in some companies a sole shareholder holds 25 per cent or more of shares and could block policies single-handedly, the document says a threshold of between 50 and 75 per cent may be "more appropriate." If a company failed to achieve the required majority, it would have either to stick with its existing policy or put a revised proposal to a general meeting within 90 days. The binding vote would approve variable remuneration including salary increases and the level and criteria of performance-related pay for the year ahead. Shareholders already have a binding vote on long-term incentive schemes. John Cridland, CBI director-general, said: "Businesses do not believe binding shareholder votes are the right way to ensure that executive reward reflects performance. Binding votes do not strengthen the role of shareholders as responsible owners, but instead blur the distinction between shareholders and executives. They risk turning shareholders into micromanagers who are expected to second-guess executive decisions at every turn, hampering the effective day-to-day management of the business. But Sarah Wilson, chief executive of Manifest, the proxy voting agency, said imposing a higher approval threshold for remuneration reports "is the right thing to do based on the reaction of many companies to ballot box revolts that a "win is still a win," despite the strong dissent to the proposals." According to Mr Cable's document, five FTSE 100 companies would have failed to pass the vote on their remuneration report in 2011 if 75 per cent approval had been required, and two would have failed to reach a 65 per cent threshold. Under the business secretary's proposals, shareholders would still have an advisory vote on how pay policy had been implemented over the past year. But if companies failed to reach 75 per cent in the advisory vote, they would have to issue a statement to the market detailing the issues raised and how they will work with investors to address them. Mr Cable also plans to give shareholders a binding vote on pay-offs to executives that exceed the equivalent of one year's base salary.