Lord Myners has accused excessive bonuses of ruining British pension funds.
Speaking at the National Association of Pension Funds' Corporate Governance Seminar today, the City minister attacked institutional investors saying the excessive bonus culture is hitting British pensions.
Myners told delegates the real losers in the failure of institutional pension funds to control bonuses were the funds' own members.
He said: "Over the past decade people who owned shares in UK banks have enjoyed a return of little more than zero. Over the same period bank executives and traders have taken home many billions of pounds in remuneration.
"If you owned a bank outright, that is to say you were the sole shareholder, you would never stand for such a situation - but collectively we have.
"Somewhere in the fragmentation of ownership of quoted companies we appear to have lost the ability to hold the boards of some public companies to account."
Myners also said companies should be run for the benefit of their owners, not for their highly paid employees - and urged shareholders and trustees to be engaged as it is in their interest to maximise the value of the firms in which they are invested.
He added: "The true owners, pension fund trustees and others, have been intermediated out of the story by agents who do not think and act as economic theory would tell us to expect of owners."
Last month, Myners wrote to big shareholders demanding to know what they planned to do to limit bankers' bonuses.
NAPF chief executive Joanne Segars said the trade body had responded to calls for improved governance.
In her opening speech to delegates, Segars said: "We would not suggest, as some have, that the failure of institutional investors to hold financial institutions to account was the main cause of the global financial crisis.
"But we have recognised - and acknowledged publicly - that we could have done more, and should have done more."
The NAPF has launched a new governance code that will urge pension funds and other institutional investors to engage more actively with boards in order to promote better standards.
It will also launch Corporate Governance PensionsConnections to keep members up-to-date with latest developments and information, including guidance from the NAPF, government and others.
Last month, the trade body amended its corporate governance policy (PP Online, Januray 20). And, in November last year it sent remuneration guidance to FTSE350 chairmen urging executive pay restraint and that company remuneration be aligned with the long-term interests of shareholders.
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