March 12, 2013 / 4:11 PM / 6 years ago

UPDATE 1-Germany starts work on manager pay rules - Merkel ally

(Adds opposition quote, detail)

BERLIN, March 12 (Reuters) - German Chancellor Angela Merkel’s centre-right coalition aims to agree rules on executive pay by the summer that would strengthen shareholders’ powers but avoid setting caps, a senior lawmaker said on Tuesday.

Michael Grosse-Broemer, parliamentary floor leader of Merkel’s conservatives, told reporters the government intended to give shareholders the right to decide on remuneration at annual general meetings.

With Merkel’s coalition partners, the pro-business Free Democrats (FDP), also open to such reforms, the coalition could agree next week and the rules could be passed before parliament’s summer recess, which starts in mid-July, he said.

Merkel, facing an election in September, is keen to show voters she can rein in boardroom excess at a time of weak growth in Europe’s biggest economy.

Corporate pay has come under attack across Europe.

Earlier this month Switzerland voted to impose some of the world’s strictest controls on executive pay and the European Commission is working on a proposal for similar rules that would apply to all 27 EU members.

Grosse-Broemer said Germany aimed to make remuneration more transparent and to shift decision-making on salaries and bonuses away from small committees.

“However, we do not want a state-imposed cap, rather (we want) to strengthen the rights of the owners,” he said, giving no further details on the new shareholder powers.

Gerda Hasselfeldt, a senior member of Bavaria’s Christian Social Union (CSU) which also shares power in the coalition, said this could be achieved with a small change in company laws.

The FDP has backed the idea of giving shareholders more power over rewarding company managers, agreeing at the weekend that remuneration under certain conditions should be tied to shareholder approval.

The coalition parties on Tuesday charged lawmakers with expertise in economic and legal affairs with preparing the new rules.

However, the opposition Social Democrats (SPD) accused the government of failing to tackle the problem and of trying to shut down debate on the issue.

“This very small initiative announced by the conservatives ... will not solve the problems of what is at times excessive board and management pay,” said senior SPD lawmaker Joachim Poss.

“There are very many individuals among the shareholders of big companies who have no interest in limiting remuneration.”

The SPD has called for limits to tax deductions on salaries, bonuses and payoffs. (Reporting by Andreas Rinke; writing by Madeline Chambers, editing by Gareth Jones, John Stonestreet)

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