The Government is preparing to water down plans to curb excessive executive pay, amid fears of gridlock in Parliament and claims that current legislation is “working well”.

The Prime Minister planned to give shareholders more powers to challenge boards as part of what she said was an attempt to restore trust in business.

It is understood, however, that the most radical of the proposed reforms are likely to be abandoned in the coming weeks.

They include a proposal for more binding votes on remuneration. City investors wanted a 25pc protest over pay at an AGM to trigger a binding vote on a company’s underlying remuneration policy.

Under the existing system listed companies have to subject their pay policy to a binding vote every three years and resolutions on pay are passed with a simple majority vote.

The change would have required legislation and according to City and Whitehall sources is due to be shelved as Theresa May’s minority Government is likely to face struggles in Parliament over its legislative programme.