Companies: Executive Remuneration

Lord Lea of Crondall Excerpts

Wednesday 9th February 2011 Lords Chamber

[Baroness Wilcox]

My Lords, we are in the middle of discussions about these very subjects. They are areas that have been under review for quite some time. Some people ask that shareholders should have separate votes, and some people ask the Government to intervene in all sorts of ways. There are ongoing discussions, particularly about the role of remuneration committees. I emphasise that it is for shareholders to go to shareholders’ meetings and say what they think.

[Lord Lea of Crondall]

My Lords, I was for many years a member of the Royal Commission on the Distribution of Income and Wealth which looked at data going back to the 19th century. We are now going back to the 19th century in so far as we had these ratios certainly before the First World War. Although it may be said that the gap occurred under a Labour Government—and some of us raised this question then—do this Government think it is satisfactory that it continues to grow, rather contracting?

[Baroness Wilcox]

I suppose what the noble Lord is really asking about is directors’ pay and fairness. That is where we all are now. I think we would all agree that there must be a robust link between the pay of those who run companies and the performance of those companies; that rewards for failure are not acceptable; and that exceptional rewards for mediocre performance are not in anybody’s best interest. I can assure noble Lords that this Government are very interested in making sure that companies are run well and that there is fairness in distribution on the payment for everybody in a company.