Berlin - Executive pay would become more transparent under tough new rules adopted Wednesday by German Chancellor Angela Merkel's cabinet.

The plans include steps to extend from two to four year the period after which managers can exercise their stock options. Such options often form part of executive remuneration.

This is intended to motivate executives to work for a company's long-term interests instead of concentrating on short-term results.

The cabinet rules call for executive pay to be in reasonable proportion to performance and to other salaries paid in the branch.

The rules also allow for boards to reduce executive pay retroactively if a company's financial situation deteriorates.

Merkel's ruling coalition of Christian Democrats and Social Democrats are still negotiating a cap on executive pay after failing to agree on such a measure last week. The measure would still need parliamentary approval before taking effect. (dpa)