VIDEO: House of Commons

Shareholders should be able to hold binding votes over executive pay, Business Secretary Vince Cable has announced.

Answering an urgent question on 23 January 2012, Mr Cable told MPs it was not ministers' role to "micro-manage" companies' pay, but said steps should be taken when there was "clear market failure".

The business secretary said the government planned to introduce greater transparency over pay and more powers for shareholders, as well as creating more diverse boards and remuneration committees.

"We cannot continue to see chief executives' pay rising at 13% a year while the performance of companies on the stock exchange languishes well behind," he told MPs.

However Mr Cable warned there was "no magic bullet" for tackling the issue of executive pay.

Shadow business secretary Chuka Umunna, who tabled the urgent question, said the proposals did not go far enough.

"We [the Labour Party] agree that it is right that those who work hard, generate wealth and create jobs for our country are rewarded, but of course excessive pay and rewards for failure are bad for business, the economy and society at large," he told MPs.

Mr Umunna also accused Mr Cable of "seeking to avoid being held to account by the House of Commons".

Mr Cable had initially planned to launch his proposals in a speech to a thinktank, prompting complaints from Labour that they should be outlined directly to MPs first.