Today’s business press contains worrying signs that Vince Cable’s efforts to rein in executive pay are under attack.

The first is a story in the Financial Times (£), reporting that the Business Secretary is likely to back down on his proposal that company pay policies should be backed by a ‘supermajority’ of up to 75% of shareholders.

The only good argument against a 75% threshold appears to be the potential for a small group of investors to wield undue influence. However, it is possible to draft the legislation in a way that takes account of this – by requiring, for example, that those voting against remuneration reports represent a minimum number of shareholders, or a minimum proportion of the total number of shareholders. These are already requirements for investors wishing to propose a resolution at an AGM.

By contrast, there are several good arguments for the proposal. The recent high-profile rebellion at CitiGroup, where 55% of investors failed to back the company’s remuneration report, made the news because it was unusual. As the High Pay Commission’s research found, ‘defeat over remuneration is rare – even at the height of the financial crisis only five companies lost the vote on their remuneration report’.

Most investors are extremely passive in their voting behaviour, which means that most overpaid execs will be able to rest easily, knowing that a majority of investors rebelling against their proposal is very unlikely.

The second worrying story is the widely reported view of the CBI that greater shareholder powers would lead to investors ‘micro-managing‘ companies. I’d like to reassure the CBI that they needn’t fret about that: institutional investors typically have holdings in thousands of companies, and so do not have the time to micro-manage anyone.

The CBI should also consider that investors should, perhaps, be somewhat more assertive. Over the last few decades, executive pay has risen out of all proportion with either company performance or employee pay, which leads to perversely motivated executives and undermotivation in the wider workforce.The CBI says that the IDS research which showed a 49% year-on-year rise in top pay has been ‘misread’, but numerous other studies point in a similar direction.

The CBI says it represents British business. Perhaps it is time to remember that the interests of British businesses, and the interests of their executives, are not always the same thing.