Oral Answers to Questions

David Davis Excerpts

Tuesday 22nd October 2019 Commons Chamber

[Kelly Tolhurst]

I thank the hon. Lady for the work she is doing on the Select Committee. Thomas Cook did have clawback and malus arrangements in place for the recovery of directors’ bonus payments in specific circumstances, as required by the UK corporate governance code. My right hon. Friend the Secretary of State has asked the Insolvency Service to fast-track an investigation, and it will report back. As the hon. Lady outlined, the CEO did advise the Committee on 15 October that he would consider voluntarily surrendering some of his 2017 cash bonus, but it must be pointed out that no bonus was paid to the ex-CEO in 2018.

[Mr David Davis (Haltemprice and Howden) (Con)]

The hon. Member for Leeds West (Rachel Reeves) highlighted the point that the biggest concern is not simply how much is paid to executives, but their being paid for failure, not for success. The current arrangements in British company law allow chief executives and other executives to be paid on the basis of share price and allow them to buy back shares, propping up the share price. This is a formula for payment for failure. Is the Department looking at that?

[Kelly Tolhurst]

I thank my right hon. Friend for raising this. Part of the reforms in January was to make organisations report back on the effect of share price growth on executive pay outcomes. We published some evidence before the summer from a review undertaken on share buy-backs, and there was no clear evidence to suggest that they did have a perverse outcome.