THE Government has ruled out legal curbs on directors' pay after publishing research showing that better disclosure of earnings had delivered a substantial change in behaviour.

Rules introduced in 2002 giving shareholders a vote on pay deals had improved dialogue between companies and shareholders and opened directors' remuneration packages to closer scrutiny, said ministers.

There had been calls for action to curb boardroom excesses, but the Government announced yesterday it had decided against introducing provisions in the forthcoming Company Law Reform Bill.

Trade and Industry Secretary Patricia Hewitt said a report by Deloitte and Touche showed that companies had changed their policies to reflect the link between pay and performance:

"We are seeing higher levels of compliance by top British companies, improved disclosure of directors' pay and rewards and better engagement with shareholders."

Companies now put their remuneration report to a separate shareholder vote.