Companies: Executive Remuneration

Lord Lea of Crondall Excerpts

Tuesday 31st January 2012 Lords Chamber

Asked By

[Lord Lea of Crondall]

To ask Her Majesty’s Government how they will ensure that company boards take full account of the interests and views of employees and the wider public in the determination of executive board pay.

[The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Baroness Wilcox)]

My Lords, it is not for Government to micromanage how companies set board pay. Indeed, it is for shareholders to challenge where they believe pay is inappropriate. Last week, the Secretary of State for Business, Innovation and Skills announced proposals to improve the information that shareholders have at their disposal, and this includes requiring companies to report on how they have taken account of the views and pay levels of employees, and company performance, when setting executive pay.

[Lord Lea of Crondall]

I thank the Minister for that reply. Mr Cable’s statement undoubtedly contained some excellent analysis, but two questions arise. First, without implementing Ed Miliband’s proposal for worker representatives to be on remuneration committees but simply relying on corporate shareholders to stop the insane leapfrogging that goes on at present, what is there—except in the special case of RBS—that will bring about these overdue changes? Secondly, on information and consultation bodies in industry, Mr Cable’s wish for things to move faster than the present snail’s pace is welcome, but again it is not clear what the driver of faster change will be. Will the Secretary of State take an early opportunity to discuss his ideas on this with the TUC?

[Baroness Wilcox]

Actually, shareholders are getting more engaged on the issue of pay. They have publicly stated their intention to get tougher, particularly with the large public companies, and we are giving them the tools to do this, which is what the Secretary of State, Vince Cable, said last week. As to the second half of the question—which the noble Lord is perfectly entitled to ask, as he reminded me before we came in here today—my ministerial colleagues Vince Cable and Ed Davey meet regularly with representatives of the TUC and will look to discuss this with them the next time they meet.