Directors’ Pay

Michael Meacher Excerpts

Wednesday 20th June 2012 Commons Chamber

[Vince Cable]

The hon. Gentleman is right to stress that we are talking not just about reward for failure but about the general escalation of the pay of top executives unrelated to company performance. It is not likely that we could produce a simple metric of how the policy will work through, but if annual or tri-annual reviews of policy are successfully implemented across companies, with well informed shareholders exercising their votes, I think that in a few years’ time we will see a good deal of restraint and more strategic thinking in the setting of pay policies. That is what we are trying to achieve.

[Mr Michael Meacher (Oldham West and Royton) (Lab)]

Three years is an awful long time to pack in share options, mega-bonuses, huge share handouts, long-term incentive pay schemes and so on. Why not have an annual binding shareholder vote to stop top executive remuneration ballooning wildly out of control within a three-year grace period?

[Vince Cable]

Even if that perverse behaviour were to occur, there would still be the existing annual backward-looking advisory vote. If shareholders are dissatisfied, the company, subject to the Financial Reporting Council’s work, will be required to issue a statement, which will require a binding vote the following year. Checks and balances are built into the system to ensure that the abuses the right hon. Gentleman describes simply do not happen.