Brussels wants to end fat cat secrecy

BRUSSELS has waded into the battle to force public companies across Europe to disclose executive pay and give shareholders a vote on remuneration.

In a decision that is a thinly veiled dig at Germany executives who keep the details of their pay from shareholder scrutiny, the European Commission has recommended that all listed EU firms publish details of directors' pay and that shareholders should vote on executive options and share schemes.

While bosses at British public companies already have to declare their salaries, and shareholders get a vote - which is not binding but is persuasive - on any pay rises, the packages of executives at giants such DaimlerChrysler and BASF are protected from scrutiny.

Despite changes last year to Germany's corporate code of conduct to ask companies to publish directors' pay, two-thirds of the country's biggest firms remain reluctant to hand out detailed information. Many will only say how much is spent on their directors as a total, and shareholders have little say in the matter.

According to estimates by German shareholders' association DSW, this means a company such as DaimlerChrysler can pay its bosses an average of around £2.3m each without any obligation to make the precise details available to investors. DSW's Christiane Hoelz claimed the worst offenders were BASF and VW. 'The EU recommendation goes far beyond what we have in Germany. It's a very good thing,' she added.

The anticipated pressure from Brussels this week will carry no legislative weight but is intended to bolster the cause of shareholders in German companies.

However, a spokesman for European employers' organisation UNICE was scathing about the EU's efforts to meddle in corporate matters. 'The culture is different,' he said, in a bid to explain why German bosses - and notoriously Belgians, too - do not have to say how much they get paid.

He accused the pro-transparency movement of being motivated simply by 'unhealthy, prurient interest' and claimed that the time is not ripe for a de facto harmonisation of executive pay.

But it is the kind of approach now fully embraced in Britain which stopped GlaxoSmithKline doubling its chief executive Jean Pierre Garnier's salary during an otherwise ropey year in 2002 after UK investors balloted against the pay rise.