This article is from the source 'bbc' and was first published or seen on . It will not be checked again for changes.

You can find the current article at its original source at http://news.bbc.co.uk/go/rss/-/1/hi/business/8024401.stm

The article has changed 2 times. There is an RSS feed of changes available.

Version 0 Version 1
Europe calls for bonus clamp-down Europe calls for bonus clamp-down
(about 3 hours later)
The European Commission has called for restrictions on executive pay in the wake of the financial crisis that sparked the global economic downturn.The European Commission has called for restrictions on executive pay in the wake of the financial crisis that sparked the global economic downturn.
The commission recommends that the majority of any bonus should be delayed to reflect longer-term performance.The commission recommends that the majority of any bonus should be delayed to reflect longer-term performance.
It also says that firms should be able to claw back bonuses already paid.It also says that firms should be able to claw back bonuses already paid.
Excessive pay and bonuses have caused public outrage in Europe and the US, and have been cited as one of the causes of the current financial crisis.Excessive pay and bonuses have caused public outrage in Europe and the US, and have been cited as one of the causes of the current financial crisis.
The commission also recommends setting a limit on severance pay, or so called golden parachutes. This would be two years of the fixed component of a director's salary.The commission also recommends setting a limit on severance pay, or so called golden parachutes. This would be two years of the fixed component of a director's salary.
Full transparencyFull transparency
In light of the banking crisis, many have seen bonus schemes and severance pay as rewards for failure.In light of the banking crisis, many have seen bonus schemes and severance pay as rewards for failure.
The culture of big bonuses, critics argue, encouraged short-term profit seeking and risk-taking at the expense of longer-term, prudent financial planning.The culture of big bonuses, critics argue, encouraged short-term profit seeking and risk-taking at the expense of longer-term, prudent financial planning.
"It is neither sensible nor sane that pay incentives encourage excessive risk taking for short-term gain," said the European Commission's internal market commissioner, Charlie McCreevy."It is neither sensible nor sane that pay incentives encourage excessive risk taking for short-term gain," said the European Commission's internal market commissioner, Charlie McCreevy.
"Incentives need to be aligned with long-term, firm-wide profitability," he added."Incentives need to be aligned with long-term, firm-wide profitability," he added.
The commission says that remuneration should be fully transparent and disclosed, and decided by the board and "not delegated to senior management".The commission says that remuneration should be fully transparent and disclosed, and decided by the board and "not delegated to senior management".
"Financial institutions should also be able to claim back already paid bonuses, where data has been proven to be manifestly mis-stated," it said."Financial institutions should also be able to claim back already paid bonuses, where data has been proven to be manifestly mis-stated," it said.
It also says that non-executive directors should not receive share options as part of their pay, in order to avoid conflicts of interest.It also says that non-executive directors should not receive share options as part of their pay, in order to avoid conflicts of interest.
The recent meeting of the G20 in London called for restrictions on executive pay.The recent meeting of the G20 in London called for restrictions on executive pay.
Hedge fundsHedge funds
In the US, a 90% tax on bonuses paid to executives at banks bailed out by the government has recently been passed by the House of Representatives.In the US, a 90% tax on bonuses paid to executives at banks bailed out by the government has recently been passed by the House of Representatives.
The bill was sparked by the $165m of bonuses paid out by US insurer AIG after it received $170bn from the US government. The bill was sparked by the $165m (£111.7m) of bonuses paid out by US insurer AIG after it received $170bn from the US government.
The European Commission has also proposed a directive to regulate alternative investment funds, which include hedge funds.The European Commission has also proposed a directive to regulate alternative investment funds, which include hedge funds.
These funds, which managed about 2tn euros at the end of last year, according to the commission, are currently unregulated. These funds, which managed about 2tn euros ($2.65tn; £1.8tn) at the end of last year, according to the commission, are currently unregulated.
They have also been criticised for adversely affecting stock markets by taking big bets on falling shares.They have also been criticised for adversely affecting stock markets by taking big bets on falling shares.
But the EC directive on hedge funds did come in for some criticism.
"These proposals are muddled and haven't been thought through", said Ash Saluja at law firm CMS Cameron McKenna.
"One big worry is over funds established outside the EU, particularly in tax efficient jurisdictions such as the Cayman Islands."
If these countries do not meet the EU's requirements, UK investors will no longer be able to invest in funds established there, he said.