Baroness Wilcox
My Lords, I thank the noble Lord, Lord Stevenson, for his support for some of the things that we have done. Obviously he feels that we have not gone far enough, which is what I expected him to say. Of course, that allows me to say that in all the years that his Government were in power, they did not do any of this. Therefore, I hope that he will feel that we have at least made a decent start and will encourage us as much as he can.
I will answer some of his questions. We consulted extensively with business and investors. The Association of British Insurers today said that the package was practical and workable, and would help investors tackle excessive pay. I know Sir Roger Carr very well. I was on the board of Cadbury Schweppes with him, and we were also—I think—on the Audit Committee and the Remuneration Committee at the same time, so he and I have some history, and I am sure that we will agree over the years.
The noble Lord asked why we had gone for a binding vote and why we had changed the time period from three years. Shareholders will get a binding vote on a company’s pay policy, as we said, including on exit payments. This binding vote will happen annually unless companies choose to leave their pay policy unchanged, in which case the vote will happen at least every three years. The idea on consultation was that it would encourage companies to set out long-term pay policies clearly linked to company strategy rather than short-term, one-year pay policies. We hope that it will put a brake on continuous upward pay ratchets. However, we will watch and see whether it succeeds.
On employee representation, we have acknowledged that employees’ views on pay are important. That is why I proposed that companies should report on whether they have sought the views of the workforce. We will monitor this very carefully. As for employees on boards, nothing stops companies doing this already, but we are not saying that it should be enforced—we do not believe in mandating this across all firms. We hope that the things that we put forward today will give people confidence to go forward, and certainly will give confidence to employees, who have a lot of powers that they have not yet used, which are similar to those of shareholders who have gone forward and said, “Enough is enough”.
Earl Attlee
My Lords, perhaps I may remind the House of the benefit of short questions to the Minister, in order that she may answer as many as possible.