Companies: Executive Remuneration
Debate between Lord Tugendhat and Lord De Mauley
Lord De Mauley
My Lords, boards need to change and we are taking measures to promote greater diversity, but we do not believe in mandating that employees should be on boards. We encourage employees to get engaged by taking up their existing rights to information and consultation arrangements.
Lord Tugendhat
My Lords, encouraging as the Minister’s replies are, does he not agree that this matter is now urgent? No doubt he will be aware that last year, the total remuneration of FTSE chief executives increased by a further 10%, on top of the very substantial increases of recent years. That is quite out of line with the performance of share prices, with the economic performance of the country, and with what happens to everybody else. It really is a very urgent matter because capitalism is being brought into disrepute.
Lord De Mauley
My Lords, I am sympathetic to my noble friend’s view. We have to balance that against the fact that, while it is not the Government’s role to micromanage company pay, we have a role to play in addressing what is, as he says, a clear market failure. The culture has to change, too. We are pleased to see institutional investors taking a tougher stance on pay than they have in the past.