As I commented on previously, David Cameron wants shareholders to vote on directors’ pay packages. Another problem with this occurs to me.
Right now I can value a company on its past performance and what I think its future performance will be, and part of this evaluation comes from my opinion of the decision-making abilities of the people in charge. If I know who they are, and am confident that they will hire the right people into the right positions, I might value the company more highly.
If shareholders make decisions I have the problem that the performance of the company depends on who the shareholders are, and I do not know who the other shareholders are.
In the specific case where shareholders can vote on directors’ pay, if we assume that the highest pay attracts the best performing directors, then the best performing companies will end up being the ones with the least left-wing shareholders.