Would a 'sin bin' solution to excessive executive pay work?

City investors are proposing the idea of a ‘sin bin’ to clamp down on excessive executive pay.

Under proposals lead by the Investor Association - whose members own a third of the FTSE 100 - firms would automatically face a binding vote on pay policy at their next annual general meeting if over a quarter of shareholder’s protest the directors’ remuneration report, The Telegraph reports.

City fund managers say that a ‘sin bin’ approach would allow companies that engage properly with shareholders on executive pay and avoid excessive bonuses.

Under the current system, public company shareholders get a binding vote on pay policies every three years. Institutions are calling for a way to trigger a binding vote, rather than imposing an annual binding vote - an option put forward by the Government in a Green Paper last year.