HC Deb 08 March 1995 vol 256 cc329-30
12. Mr. Clapham

To ask the President of the Board of Trade what measures he proposes to introduce to regulate the issue of share options.

Mr. Evans

Share options and other aspects of directors' pay are under consideration by the Greenbury committee. I have no plans to introduce any measures in advance of that committee's findings.

Mr. Clapham

I am rather surprised at the Minister's answer, particularly in view of the public concern, of which he must be aware, and in the light of the Prime Minister's acceptance of Labour's position that something must be done about boardroom excesses. The Minister must also be aware that it was revealed recently that 77 directors of the private electricity companies had awarded themselves £72 million in share options. In the light of that, does he agree that it is in the public interest for the Government to regulate to control boardroom excesses?

Mr. Evans

My right hon. Friend the Prime Minister has made it absolutely clear that the Government are prepared to give legislative backing to any proposals from the Greenbury committee which require such back-up. We are prepared to examine that issue.

However, the hon. Gentleman seems to suggest that share options as a whole should be opposed. We believe that well-devised share option schemes help to motivate key staff and to reward high performance. I welcome proposals from institutional investors to ensure that share options are linked to realistic measures of management performance. The hon. Gentleman should also know that listed companies are required to give the stock exchange full details of their share option schemes.

Sir Anthony Grant

Does my hon. Friend agree that, rather than having share options, it would be much more motivating, stimulating and sensible if executive bonuses were linked to movements of the FT Index, so that executives shared the losses as well as the profits, as do shareholders? Is that not precisely what British Gas is proposing?

Mr. Evans

The Government primarily take the view that companies should decide the pay levels of their staff. My hon. Friend will be aware that the Greenbury committee has said that it is drawing up a code of conduct on that subject. I know that the committee is prepared to examine a wide variety of possible forthcoming proposals.

Dr. John Cunningham

The abuse of share options is widespread among privatised monopoly utilities such as gas, water and electricity. The Government have a Bill about the gas industry before the House, but why does it contain no proposals to end those abuses in the interest of the consumer? Would it not he better for the President of the Board of Trade, instead of pouring out his energy wastefully in the bluff and bluster that we have just heard, to expend it more efficiently in taking the action which people the length and breadth of the country want to end the abuses? The opportunity exists now. Why do not the Government take it, or is it once again the Prime Minister expressing distaste for something but doing nothing about it?

Mr. Evans

Many in the House will find it strange and inconsistent on the part of the Opposition that, although they attack the whole concept of the share options, they tabled an amendment to the Finance Bill, the effect of which would have been to grant unlimited tax relief to company directors on fees paid for tax advice on the best time to exercise share options—a proposal that "Accountancy Age" said had tax planners in Britain licking their lips with anticipation.