Directors’ Pay

Baroness Burt of Solihull Excerpts

Wednesday 20th June 2012 Commons Chamber

[Vince Cable]

I have already indicated in my statement that we are examining disclosure levels. There is an encouraging trend towards disclosure, and as the hon. Gentleman knows, the big weight of votes comes through the big pension and insurance companies. I have said that we will consider further measures if the current ones do not lead to the right trajectory, and his point is a useful one.

[Lorely Burt (Solihull) (LD)]

I very much welcome these proposals. The three-year binding pay policy will help to constrain the constant upward spiral in directors’ pay increases that we have seen in recent years. It has been suggested that the three-year pay policy agreement may turn out to be deflationary as growth improves in the economy and, hopefully, in companies. Does my right hon. Friend agree, and would he welcome that?

[Vince Cable]

My hon. Friend is right, and that was one point that institutional investors made when we consulted them. They saw that the option of having a three-year unchanged policy would be helpful in deflating top pay. She is right that the problem that we are dealing with is an upward spiral in which pay is often unrelated to performance and top executives are trying to get into the top quartile, where by definition they cannot all be.