The "social scourge" of excessive boardroom pay has prompted widespread debate in the European Union as workers see their purchasing power eroded by ­rising prices and low wage increases. European political leaders have demanded a legal and fiscal clampdown.

Shareholders, especially retail investors, are pressing for greater corporate disclosure of remuneration policy, inc­lu­ding links to performance, and individual directors' pay packages as well as votes on the issue at annual meetings.

The pay debate has been exacerbated by the credit crunch, which has exposed undue risk-taking in the search for higher bonuses by highly paid investment bankers and high-profile severance packages for failed executives, deepening the sense of outrage in mainland Europe, which is culturally more egalitarian than the US or Britain.

Even before Pat Russo, chief executive of serially loss-making IT firm Alcatel-Lucent, quit in late July with a contractual pay-off of up to €6m (£4.8m), French president Nicolas Sarkozy had produced draft laws to curb such "golden parachutes".

The Dutch government has introduced legislation for a 30% tax on bonuses of more than €500,000 and a 15% increase in employer's fiscal contributions to executive pensions, partly influenced by the multimillion pay-off for ABN Amro chief Rijkman Groenink.

In Germany, where workers' pay rose only 4.3% between 2003 and 2007 as firms laid off hundreds of thousands of employees, Social Democrats are demanding a €1m ceiling on tax-deductible boardroom remuneration.

It is the widening gap between boardroom and shopfloor remuneration in a deteriorating economic environment that is fuelling the furore. The growing evidence is that mainland European companies are following the lead of their British counterparts by setting executive remuneration packages, including stock options, at a level commensurate with global — not national — peers in an effort to retain and incentivise directors.

Executive pay in the EU averages €5m a year. French chief executives are said to be the highest paid with packages worth €6m after a reported 58% leap in 2007. A recent survey by the German DSW investor lobby found that German executive pay had risen 7.75% in 2007 to just below €3m, with Josef Ackermann of Deutsche Bank the top earner with €14m, though Wendelin Wiedeking of unlisted Porsche earned more than four times that.

It is this degree of corporate generosity that prompted Jean-Claude Juncker, chairman of the EU's euro group, to label it a "social scourge".

Disclosure practices vary widely across the European Union despite a four-year-old non-binding European commission recommendation to increase corporate remuneration transparency on individual executive pay and remuneration policies as a whole.

A European commission report last year found greater transparency had ensued but responses had been patchy, with only a third of member states enabling even an advisory shareholder vote on executive remuneration. In Germany, where only 40% of the top 30 firms in the Dax have remuneration committees and most annual reports detail just the package of the highest earner, even that stipulation causes anger among directors.