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Company Law Reform Bill [HL]

The noble Lord is entitled to that view in relation to this Bill. We agree with the noble Lords, Lord Lea and Lord Clinton-Davis, on the importance of transparency. It is important and increasingly it is being brought about not only since the passing of the directors’ report regulations, but also from other sources such as the ABI, which states what it wants to see in directors’ remuneration reports. We have hugely increased transparency. Indeed, if one looks at current sets of annual reports, full sets rather than the summarised ones, pages and pages of information are now provided on remuneration. Some still want to see improvements on the reporting, such as in relation to performance criteria for short-term bonuses. However, that takes one into the territory of commercial confidentiality some of the time. I believe that companies accept the need for transparency in relation to remuneration reporting. Remuneration committees, several of which I serve on, are fully apprised of the need for that because they know that when they get to the AGM, this is one area on which shareholders are likely to ask questions, given the greater availability of information. We agree about transparency, but I am not sure that it is a major issue because big improvements have been made to the information being provided. But I do not think that these amendments have anything to do with transparency. The first of the substantive amendments, Amendment No. 309, would set up a committee. I am not sure that a company law reform Bill is the right place in which to seek to set up committees. The noble Lord, Lord Lea, seems to be suggesting that committees should be set up in all companies other than very small ones, which goes way beyond current remuneration committee requirements. The function of such committees is to produce a remuneration report. However, a remuneration committee does a lot more than produce a remuneration report. It considers all the issues raised by the noble Lord in relation to basic pay, performance-related pay, pension provision, severance arrangements, the arrangements which have to be made for new hires and so forth. At the end of the year it reports on them in the annual report.