Directors’ Pay

Lord Tomlinson Excerpts

Wednesday 20th June 2012 Lords Chamber

[Baroness Wilcox]

In answer to my noble friend’s first question, company law captures only UK companies. However, overseas companies must comply with the listing rules. We will work with the FSA to consider how the listing rules need to change in view of these reforms. I hope that is a helpful answer. In answer to his second question, companies will be able to make exit payments only within the envelope that shareholders have approved and it will be up to the shareholders to agree.

I cannot imagine that my Secretary of State was ever called a crypto-socialist by anybody—was he? I know that business very much welcomes what we are doing at the moment. Shareholders and business welcome it, and it is with them that we have been talking and negotiating to make sure that we can put this into the Bill that is coming up and that we can introduce secondary legislation so that we can get this moving as soon as possible. Everybody seems to agree that things must change.

[Lord Tomlinson]

My Lords, did the Minister hear the discussion on Radio 4 this morning in which one company chief executive reminded us of the fuss there was 10 years ago when the salary of the chief executive of British Gas reached £460,000? Is she surprised that, 10 years later, when FTSE chief executives have an average salary of 10 times that amount, this Statement smacks somewhat of closing the door after the horse has bolted? It is not sufficient just to deal with the present problem because the proposals that are being made build in the inequity that exists at the present time.

When the Minister talks about pay, precisely what is she talking about? Is she talking about total emoluments, of all sorts—pay, share options, shares, accommodation provided; the whole gamut, everything included—and will that be made absolutely transparent? Can she give us that assurance at least to make sure that there is no progress on the inequity?

[Baroness Wilcox]

I am very happy to reassure the noble Lord that we mean pay—all of it—and that is why we said in the Statement that there would be one figure. One figure means you do not have to work your way through myriad figures and arrangements, et cetera, so that it will be clear to everybody exactly what that person is getting.

I did hear the interview this morning. It was with two businessmen; one from a FTSE 100 company and the other one from a company that was never listed on the Stock Exchange. If you talk about closing the door, in the short time that we have been in government, we have now opened the door—a door that we feel should have been opened a lot longer ago, but we were not in government then.