Companies: Executive Remuneration

Debate between Lord Davies of Stamford and Baroness Wilcox

Wednesday 9th November 2011 Lords Chamber

[Lord Davies of Stamford]

My Lords, I have experience of corporate boards and was for a number of years the chairman of the remuneration committee of a major multinational, Vinci. Is it not the case that the present position on top executive pay is highly unsatisfactory, utterly unedifying and a threat to the good reputation of our market economy? Most sensible people would totally exclude either statutory regulation of pay or penal taxation as a solution, but simply making speeches, publishing discussion papers or trying to use moral suasion with institutional investors does not seem to get anywhere at all. In that context, may I put two specific practical suggestions to the Minister? One is that we place a statutory duty on public companies to publish the criteria and rationale for their decisions on top executive pay. The second is to adopt the French practice of having two elected representatives of the employees as a whole on the board of every publicly quoted company. Additionally, at least one of those representatives should be on the remuneration committee.

[Baroness Wilcox]

I am interested to hear the noble Lord’s tales of being on a FTSE 100 board. I, too, have been on a FTSE 100 board, so like him I have also served on a committee. We all know that there are problems and that things are not right. The question is how we put it right without damaging Britain’s competitiveness. Those 100 top companies employ so many people and it is very important that we get this balance right. As to his suggestion of worker representatives on company boards in the United Kingdom, we will of course look at this, in the same way that we will look at everything else in the consultation. We would be only too delighted if the noble Lord writes in and makes sure that his views are known on the record.