§ Mr. Jay
I beg to move Amendment No. 152, in page 6, line 3, to leave out 'be shown'.
2261 I think that it would be convenient to consider with it the following Amendments: No. 153, and the two Amendments thereto, and Amendment No. 14, and Amendments Nos. 154; 155; 156; 16; 304: 158; 160; 20; 21; 22; and 187.
This is another case where we have introduced an Amendment to meet points made during our discussions. The Bill as at present drafted, substantially for the reasons which we have just discussed, does not require information to be given about emoluments of an employee who, during the year to which the accounts relate, works wholly or mainly outside the United Kingdom. This exclusion was introduced in another place in response to arguments that salaries outside the United Kingdom may be very different from those paid here, and that it would be unreasonable to expect them to be disclosed in all cases. However, it was represented in the later stages of discussion that if we provided for the exclusion in the case of employees it is reasonable to make the same change in the case of the directors or the chairman of a company. If they also discharge their duties wholly or mainly outside the United Kingdom the situation would appear to be substantially the same as if they were not directors but were employees of the company.
That is the purpose of the Amendments, and I hope that it will be felt to be reasonable.
§ 9.45 p.m.
§ Mr. Temple
Is not the President of the Board of Trade going to make some reference to the series of linked Amendments taken with this Amendment concerning the leaving out of the reference to pension contribution? He seems to have overlooked that part of his brief.
§ Mr. Jay
If we are taking the debate on those Amendments at the same time, Mr. Speaker, I shall be very glad to do so.
It has been represented—I think that this is substantially true—that, though it is possible, as under the present Companies Act, to give the total pension contributions which a company pays to all its board of directors, there are nevertheless substantial technical and financial difficulties in splitting these total contributions as between individual directors. 2262 That argument seems to us to have force. Therefore, we are providing that pension contributions for the purpose of disclosure of information about individual bands of directors shall be excluded. I think that that will probably command the assent of the House.
§ Mr. Temple
I felt a little hurt that the President of the Board of Trade had not made reference earlier to the fact that there had been Government acceptance of a suggestion that I made in Standing Committee. I took three-quarters of an hour to make it in order to impress upon the Government the error of their proposals.
§ Mr. Jay
There was no lack of recognition of the hon. Gentleman's efforts on my part. I was not sure whether the House wished to debate these slightly different items simultaneously.
§ Mr. Temple
But Mr. Speaker ruled that the Amendments would be taken together. The President of the Board of Trade should keep his ears open rather more in future. Otherwise, with these big groups of Amendments we may slide over certain debates.
I thought that the right hon. Gentleman was a trifle ungenerous to the Opposition. Not only did he accept the proposals put forward by the Opposition in Committee but he added his own name to certain of our Amendments, which is almost unprecedented. His right hon. Friend the Minister of State said in Committee that he would have to look into the drafting of my Amendment. Now we find that the very words that I propose have been incorporated in Clause 8 in order that directors and senior salaried employees shall not have their individual pension contributions referred to. We on this side are very pleased to have achieved this success. It only goes to show that without the constant vigilance of the Opposition this Government Bill would have been even greater nonsense than it is at present in certain respects.
Certain of my hon. Friends take the view that it is not our job to improve Government legislation. I take a slightly contrary view. I think that where it is clear that the Government are erring in the suggestions that they put forward in these complicated matters it is our duty to point this out. I took a good deal of time in Standing Committee. I think 2263 that the Minister of State remembers certain aspects of my speech because it was very long and detailed, but it was on a very long, detailed and complicated matter.
I have one little warning for the right hon. Gentleman. We shall come later to another pension matter which is equally as long and complicated as the matter which we have just dealt with. The President of the Board of Trade has put a sensible proposal not to show these pension contributions in detail. He is extraordinarily fortunate in not having here tonight his hon. Friend the Member for Westhoughton (Mr. J. T. Price), who, in Committee, took violent objection to my Amendments. Therefore, had he been present tonight, he would have taken violent objection to his right hon. Friend's proposals. We are glad that the right hon. Gentleman has introduced them, we welcome them and we will continue to do our best to improve the Bill.
§ Mr. Airey Neave (Abingdon)
The President of the Board of Trade has not mentioned the two starred Amendments in the name of my hon. Friend the Member for Gloucestershire, South (Mr. Corfield) both of which would leave out "chairman" and insert "director" in Government Amendment No. 153. This raises once again the question of isolating the chairman.
Surely, it would be much better if the chairman's position as a director was described rather than simply his position as chairman, which would segregate him quite unnecessarily. In these circumstances, will the right hon. Gentleman consider this and tell us what he thinks about my hon. Friend's Amendments? One would think that some people are anxious to know how much the chairman of a big company is paid but, as we have pointed out earlier, it could be misleading if his position as chairman was mentioned as distinct from his position as a director of the company.
The President of the Board of Trade said in Committee:It is a matter of general interest to the whole company, to the employees and others, what the chairman is paid."—[OFFICIAL REPORT, Standing Committee E, 7th March, 1967; c. 212.]
§ Mr. Burden
A glaring example is where the chairman is also the managing 2264 director. Presumably, the fact that he was also the managing director would not be made clear. There is an idea in many people's minds that the chairman is more or less a figurehead. His emoluments would be given on the basis of his position as chairman and not as managing director.
§ Mr. Neave
I thank my hon. Friend for his intervention. That is why my hon. Friend's two Amendments are so important. Throughout industry, only 10 per cent. of chairmen are managing directors. We discussed in Committee that there were several different types of chairmen. Some might come from outside and be given functions and be paid fees for their special advice and activity in the company. If the chairman's salary was disclosed in his position as a director, nobody on this side could have any objection, but if he were to be segregated and shown solely as chairman, we would regard this is highly misleading.
My hon. Friend has correctly said that many people regard the chairman as the boss, but in 90 per cent. of companies the chief executive or managing director is the boss and the chairman is a fellow director. One of the dangers is that the public and the shareholders could be misled about this. It is not fair to chairmen to present them in that light. They have received a good deal of criticism of various sorts for the size of their salaries. As by isolating chairmen in the manner proposed the President of the Board of Trade will give a misleading picture, he should accept the two starred Amendments of my hon. Friend the Member for Gloucestershire, South.
§ Mr. Michael Shaw
The two main groups of Amendments which we are discussing have slightly different themes. In any event, the Clause is muddled, as my hon. Friends have said. For reasons which I explained in Committee, the reason for that is that it has been built up in stages. Quite frankly, I think that the whole meat of the Clause is obtained quite fully in the necessity to disclose the number of directors in each £2,500 bracket all the way up. There are not going to be many directors in the company earning £30,000 a year. I think they will be pretty easily identifiable. So I think that really the question of the chairman and the question of the top director 2265 if not the chairman is really superfluous to the Clause as it stands.
I should like to congratulate my hon. Friend the Member for the City of Chester (Mr. Temple) on his persistence, I might say brilliant persistence, which has been so successful in getting the approval of the Minister, if not in words then, even better, in action. Usually it is the other way round, alas: we get kind words but little response by way of action.
I should like to concentrate on the Government Amendment No. 153 and the two Amendments which were put down yesterday to that Amendment. I am sorry I did not spot it earlier, but I believe that there is a shortcoming in the Government Amendment, and it arises thus. It has now been decided by the right hon. Gentleman that disclosure of the chairman's remuneration shall be put, he said, on an equal footing with the disclosure of remuneration by the top executives, and he has visualised that in certain circumstances it could be very embarrassing to disclose the director's remuneration where that director is a foreign director, or, at any rate, spends most of his time abroad. There are various reasons; we discussed this in Committee and I will not rehearse the arguments again. The point I want to make on Amendment No. 153 is about the situation of the chairman.
As I see it, the right hon. Gentleman has put down an Amendment whereby if a airman, throughout the financial year, has spent most of his time abroad, and if his duties—not, be it noted, as a director but as chairman—are mainly carried out abroad rather than at home, then the emoluments need not be disclosed. It seems to me that the position is this, that if someone as a director of a company is largely employed abroad, then, under the terms of this series of Amendments, his emoluments need not be disclosed. If the chairman retires and the company look for a new director and they choose as chairman a director who is abroad, then immediately, because the board meetings and the annual meeting take place in this country, that is, his duties as chairman take place in this country, it seems to me that, although his main work is done abroad, he will have to disclose his remuneration, because his duties as chair- 2266 man, not as director, take place in this country and not abroad.
As I see it the question hinges on the duties, the duties as a director or the duties as chairman. If the duties as a director, which are his main duties throughout the year, are carried on outside this country, then I believe exemption should still apply to him as to other directors in a similar position. I should be grateful if, in replying, the right hon. Gentleman would deal with that point.
§ Mr. Jay
I feel almost tempted to put out once again in reply to the hon. Member for the City of Chester (Mr. Temple) that when we refrained from accepting suggestions put forward by the Opposition we are blamed for not listening to them, but when, as on this occasion, we accept one, and, indeed, put our own names to it, he brings that forward as a grievance, none the less, against the Government. The hon. Gentleman has now left the Chamber, no doubt to consult with my hon. Friend the Member for Westhoughton (Mr. J. T. Price) in some other part of the building. I will not refer to him any further.
On the two Amendments put down by the Opposition to Government Amendment No. 153—
§ It being Ten o'clock, the debate stood adjourned.
That the Proceedings on the Companies Bill [Lords] may be entered upon and proceeded with at this day's Sitting at any hour, though opposed.—[Mr. Charles R. Morris.]
§ Question again proposed, That the words "be shown" stand part of the Bill.
§ Mr. Jay
We have now provided that, in the case of any employee whose duties were wholly or mainly carried out outside the United Kingdom, disclosure would not be necessary. We have provided the same for a director, and we have provided the same for the chairman.
Hon. Gentleman opposite are still arguing, I gather, that if the chairman was merely exempted for performing the duties of chairman outside the United Kingdom and not the duties of a director, it might not be sufficient for him to qualify for non-disclosure. In our view, this point has not any great substance 2267 because, in the great majority of cases, in any event, even though the board meetings which the chairman had to attend might be held in the United Kingdom, nevertheless, where a chairman served a company both at board meetings and in the intervals between them, which I should have thought would be true in the normal case, he could be regarded as being chairman and carrying out his duties as chairman in the intervals when, ex hypothesi, he would be wholly or mainly discharging those duties abroad as well as at board meetings in the United Kingdom.
That is what I am advised would be the effect of the Clause, and I think, therefore, that we have met the substantial point which hon. Gentlemen opposite have in mind.
§ Mr. Burden
Using hypotheses again, let us suppose that there is a company with its headquarters in the United Kingdom which has an extraordinarily good director in charge of sales in America, where it has a very substantial business. Suppose, further, that because a great deal of its sales are conducted in the United States, the director in charge of the American company is brought over to become chairman of the English company, attending board meetings but, perforce, having to spend most of his time carrying out his duties connected with the company in America where he is domiciled for most of the year, only coming back to attend board meetings. I take it that, in such a case, he is subject to disclosure.
If that is the case, an entirely false impression is created. If my view is right, the costs of living and carrying out his duties mainly in America are such that he might quite properly have a salary there substantially in excess of that which he would enjoy as chairman of the company domiciled for the whole time in England. That is a situation which may well arise and, in my view, disclosure in such a case would be quite improper.
§ Mr. Jay
We have met the point which the hon. Gentleman has in mind by our Amendment. The emoluments of a chairman do not have to be shown if he discharges his duties wholly or mainly outside the United Kingdom. In the 2268 case advanced by the hon. Gentleman, although he attended board meetings in the United Kingdom, he would discharge his duties as chairman mainly outside the United Kingdom and, in that case, would be exempted.
§ Mr. Corfield
I am rather puzzled by the immense trouble to which the Board of Trade is going to ensure that everybody discloses his bits and pieces. We have here a rather complicated bit of nonsense. We have to take account of the fact that a chairman may serve half the financial year and then be replaced, but later there is a provision that if one of the directors gets paid more than the chairman he has to disclose.
Perhaps the right hon. Gentleman will be good enough to look at Amendment No. 158. Here again we have a splendid bit of English and one begins to wonder whether the office boy and the draftsmen have changed places in the Board of Trade. The Amendment reads:Page 7, line 12 [Clause 6], at end insert 'and (b) the relevant amount'—(i) if one person has been chairman throughout the year, means the amount of his emolumentsand then we go back and read:the relevant amount … if not, means …Where are we getting to in the use of the English language? One should start by saying that the relevant amount means, and go on from there, but here we have to read the whole of paragraph (i) before paragraph (ii) means anything, which is not the usual way of drafting definition Clauses. I am beginning to think that one of the easiest ways of earning a living is to be a draftsman at the Board of Trade.
§ Amendment agreed to.
Further Amendments made: No. 153, in page 6, line 6, leave out paragraph (a) and insert:
(a) if one person has been chairman throughout the financial year, be shown his emoluments (unless his duties as chairman were wholly or mainly discharged outside the United Kingdom), and if not, be shown with respect to each person who has been chairman during the year, his emoluments so far as attributable to the period during which he was chairman (unless his duties as chairman were wholly or mainly so discharged).
No. 14, in page 6, line 6, after 'emoluments', insert:
'(other than emoluments consisting of a contribution paid in respect of the person under any pension scheme)'.
No. 154, in page 6, line 10, leave out 'of all the directors' and insert:
'with respect to all the directors (other than any who discharged their duties as such wholly or mainly outside the United Kingdom), be shown'.
No. 155, in line 18, leave out subsection (2) and insert:
(2) If, of the directors of a company (other than any who discharged their duties as such wholly or mainly outside the United Kingdom), the emoluments of one only (so far as ascertainable from information contained in the company's books and papers or obtainable by right by the company from him) exceed the relevant amount, his emoluments (so far as so ascertainable) shall also be shown in the said accounts or in a statement annexed thereto; and if, of the directors of a company (other than any who discharged their duties as such wholly or mainly outside the United Kingdom), the emoluments (so far as so ascertainable) of each of two or more exceed the relevant amount, the emoluments (so far as so ascertainable) of him (or them, in the case of equality) who had the greater or, as the case may be, the greatest shall also be shown in the said accounts or in a statement annexed thereto.
No. 156, in line 36, at end insert:
'(other than contributions paid in respect of him under any pension scheme)'.
No. 157, in page 7, line 5 at end insert:
(5A) A company which is neither a holding company nor a subsidiary of another body corporate shall not be subject to the require-
ments of this section as respects a financial year in the case of which the amount shown in its accounts under section 196(1)(a) of the principal Act does not exceed £7,500.
No. 304, in page 7, line 6, after 'section' insert:
No. 158, in line 12, at end insert:
(b) "the relevant amount"—