Hewitt puts squeeze on fat cats

TRADE Secretary Patricia Hewitt has introduced new legislation aimed at stamping out over-generous pay awards for fat cats. She aims to improve the link between rewards and performance and give shareholders a bigger say in board pay.

Investors are irate at the culture of excess that has overtaken many of Britain's boardrooms. A number of top bosses have trousered multi-million pound packages, despite abysmal performance.

Sir Christopher Gent of Vodafone was recently handed a £4m package weeks after the mobile phones giant reported a £13.5bn loss, the biggest in UK corporate history.

Under the new legislation put before Parliament, companies must publish a report on directors' pay each year, and put it to a shareholder vote. The report must include details of each director's pay packet and the justification for it. It must also give the members of the committee setting pay, any consultants used and a graph comparing the company's performance with that of its peers.

Hewitt said: 'Top-class pay for the best performers is something we support. But there can be little doubt that some company directors have received lavish awards in circumstances where they aren't deserved.'

Other companies under fire for bloated executive pay include the Prudential. The insurer was forced into an embarrassing climbdown over a scheme that could have delivered up to £18m to chief executive Jonathan Bloomer, even though the shares have fallen from more than £12 two years ago to 570p.

Barclays Bank was savaged by small shareholders at its annual meeting for awarding a three-year package worth up to £15m to its boss Matt Barrett.

Shareholder lobby group the National Association of Pension Funds said: 'This is good news. It is only a shame it has taken so long.'

In the US, it has emerged that a number of former corporate titans have been raking in stratospheric pay amid allegations of corporate sleaze. They include former Enron boss Kenneth Lay, who received a $43.8m pay packet before the group collapsed.