Companies: Executive Remuneration

Lord Monks Excerpts

Tuesday 31st January 2012 Lords Chamber

[Lord Monks]

My Lords, in view of the Government’s confidence that shareholders will be able, under these new arrangements, to curb inflation in boardrooms, which has been rampant, are the Government prepared to revisit quickly the issue of representations on remuneration committees by outside interests, including employees, especially in the light of the successful experience of this in neighbouring countries across the North Sea?

[Baroness Wilcox]

I have lived in the European Union and worked in companies there that have very different methods from ours. One of the things that I found difficult was that very often when one had a range of employees on the board, the board’s decisions would be taken outside the boardroom and what happened inside the boardroom was rubber-stamping. We certainly do not want to see that in this country. However, we are looking at whatever we can. I will reinforce the point, if I may, that UK employees in large companies already have the right to request that their employers consult them through information and consultation arrangements, and we would encourage them to use those arrangements. More than that, I would encourage the union leaders to encourage employee members to use them—they are available to them—rather than necessarily taking them down the path of a more extravagant gesture.