BERLIN (AP) -- The German government plans to give company shareholders a greater say in setting managers' pay — a proposal aimed at curbing perceived corporate excesses along the same lines as a measure approved by voters in neighboring Switzerland earlier this year.
Chancellor Angela Merkel's government hopes to pass Wednesday's Cabinet proposal into law before German elections in September, in which Merkel will seek a third term. The opposition swiftly denounced it as ineffectual window-dressing, while an influential industry group said there was no need for new rules.
The government's plan foresees obligatory, binding votes at publicly listed companies' annual general meetings on the pay system and maximum pay level for managers. Those decisions are currently taken by German companies' supervisory boards, the equivalent of boards of directors, and shareholder votes are voluntary and nonbinding.
The proposal "is an economically sensible and at the same time effective contribution to avoid people serving themselves in large public companies," said Max Stadler, a deputy justice minister. It doesn't call for any specific limits on salaries.
Germany's main opposition Social Democrats have attacked perceived corporate greed and said Wednesday that the plan wouldn't solve the problem. Annual shareholder meetings are "dominated by institutional investors such as hedge funds which themselves are drivers of the perverse bonus and pay system," the party's parliamentary group said in a statement.
The Social Democrats argued that decisions on executive pay should stay with supervisory boards; in Germany, employee representatives generally make up half of those boards. But they said changes are needed — for example, limiting the tax-deductibility of managerial pay and obliging directors to set a maximum proportion by which managers' pay can exceed average workers' salaries.
The main industry lobby group in Germany, which has Europe's biggest economy, said the planned new rules were "superfluous." Markus Kerber, a top official with the Federation of German industries, said they would weaken companies' supervisory boards, and argued that "those who are responsible for choosing managers must also decide on their compensation."
Germany's best-paid executive is Martin Winterkorn, the chief executive of Volkswagen AG, Europe's biggest automaker. He earned roughly 14.5 million euros in 2012, compared with the previous year's 17.5 million euros, the company said in February.
His earnings declined after the supervisory board rejigged the company's pay and bonus system. Winterkorn had previously said his pay couldn't rise boundlessly, however successful the company, and he supported the move.
Amid widespread anger over "fat cat" bosses, Swiss voters in March approved a plan to boost shareholders' say on executive pay.
Swiss lawmakers now have to draft a law giving shareholders the right to hold a binding vote on all compensation for company executives and directors. The Swiss law will also ban "golden hellos" and "goodbyes" — one-off bonuses that senior managers sometimes receive when joining or leaving a company.
The European Union's internal market commissioner, Michel Barnier, has said he plans to propose that company shareholders across the continent be given the power to set managers' pay.