Directors’ Pay

Andrew Love Excerpts

Wednesday 20th June 2012 Commons Chamber

[Vince Cable]

The hon. Gentleman is right to stress the point that shareholders own the companies. That is self-evident but often overlooked, and they have often been treated as outsiders. Clearly, widening shareholding would be desirable, and we are considering a variety of ways of doing that, not least through encouraging employees to have shares in their own company. The Under-Secretary of State for Business, Innovation and Skills, my hon. Friend the Member for North Norfolk (Norman Lamb), and I will consider how to effect that in one of the companies for which we still have direct responsibility—the Royal Mail.

[Mr Andrew Love (Edmonton) (Lab/Co-op)]

There is growing evidence that a major contributor to the ratchet effect on directors’ remuneration is the role of remuneration committees. People are concerned about the very narrow base from which remuneration committees are drawn, and there have been recommendations to widen their membership. The Secretary of State has already indicated his support for having an employee on remuneration committees. If he does not make that mandatory, will he make mandatory a wider base from which to draw the membership of remuneration committees?

[Vince Cable]

I take the hon. Gentleman’s broader point that diversity among directors is critical to changing the culture of companies. At the moment, we are focusing on women on boards of companies, on which significant progress has already been made. That is part of the wider picture of having more diversity, and more employees, among directors.