Directors’ Pay

Mark Lazarowicz Excerpts

Wednesday 20th June 2012 Commons Chamber

[Vince Cable]

It is precisely the divergence between those two things that we are endeavouring to correct. My hon. Friend’s point is certainly true of the banking system, where very large salaries and bonuses have come at the expense of dividends. These reforms should help to correct that.

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

Today’s measures are welcome, but it should not just be a question of trying to stop the upward spiral of excessive directors’ pay; something needs to be done about the current excesses. When this measure comes into effect, will the Secretary of State urge companies to consider existing levels of directors’ pay? If that does not deal with the existing excesses, will he consider returning with other measures to drive them down?

[Vince Cable]

There is an important distinction between existing pay arrangements, which are governed by contract, and future pay policies, which will be the subject of binding votes, after which those contracts can be set on a fresh principle. There is a restraint on existing pay through the advisory vote, and, as I have set out, I envisage the disciplines around the advisory vote being strengthened by the statement, subject to the operation of the Financial Reporting Council.