The accountant MP criticised proposals announced by Stephen Byers to introduce Companies Act regulations requiring UK quoted companies to publish individual directors’ pay packages in annual reports.
These would have to include the role of remuneration committees and information on performance linkage, directors’ service contracts and compensation payments.
Byers revealed his plans in the Commons and told MPs he will decide whether to legislate for a compulsory shareholder vote in the light of recommendations resulting from the Company Law Review.
And he urged institutional investors to act now to improve compliance.
Byers said he would be looking for further evidence that remuneration committees are composed exclusively of independent non-executive directors and that companies are complying with the spirit of existing best practice on accountability and that shareholders are involved.
‘Linkage to performance is a matter for the members of the board’s remuneration committee, but it is also rightly a matter of concern for shareholders.’
‘Companies and shareholders around the world increasingly recognise the importance of a proper link between pay and performance in the boardroom. In the US companies are already required to publish performance measurement comparisons,’ said Byers.
But Heathcoat-Amory protested this was ‘additional company expense for absolutely no gain at all’.
He said few shareholders actually read reports or take part in votes so the regulations would ‘add red tape to overburdened businesses to no practical effect’.
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