HL Deb 12 February 2002 vol 631 cc1002-4

3.15 p.m.

Lord Smith of Clifton asked Her Majesty's Government:

Whether, in the light of recent disclosures of multiple directorships, as revealed by the Enron corporation bankruptcy, they intend to introduce legislation to restrict the number of such appointments an individual may hold.

Lord Sainsbury of Turville

My Lords, it is very important that directors are able to devote sufficient time to their responsibilities. The number of directorships held is one factor that can affect this; there are, of course, others. There is already a requirement under the Listing Rules for all directorships held by directors of listed companies to be disclosed. This is a matter for companies and shareholders to consider when an individual is a candidate for election to a company board.

Lord Smith of Clifton

My Lords, I thank the Minister for that reply. However. I find it slightly complacent. It is of a piece with the Answer that he gave to a previous Question on remuneration. Does he agree that—conglomerates and their subsidiary boards apart—even a complete insomniac cannot do justice to discharging his duties as a non-executive director if he holds up to 17 directorships? Does he further agree that there are potential conflicts of interest in holding a multiplicity of directorships?

Will he accept that businessmen holding, say, in excess of five directorships, let alone 16, are motivated by overweening arrogance and insatiable greed?

Lord Sainsbury of Turville

My Lords, it is clearly wrong for people to take on too many non-executive directorships which they cannot carry out properly. However, I believe that it is impossible to produce legislation setting out exactly how many non-executive directorships it is reasonable for a director to hold. There are too many variables: the size of a company, its complexity, where it is located, and whether the person has other public duties. Therefore, to come up with a simple figure would be extremely difficult. I point out—although this is not in the true spirit of kicking people when they are down—that the noble Lord, Lord Wakeham, held a number of directorships, such as the Alexander Rose Day, the Warrior Preservation Trust, the Surrey County Agricultural Society, St Swithin's School, Winchester, and the Carlton Club. I very much doubt whether those are taxing jobs, or indeed well remunerated.

Lord Crickhowell

My Lords, in the light of the positively awe-inspiring list of overlapping appointments, both in the public sector and in the private sector and in academia, together with the large number of publications contained in the entry of the noble Lord, Lord Smith of Clifton, in Who's Who, will the Government seek to obtain advice from the noble Lord as to how directors and others may carry out such multiple appointments with the apparent dexterity that he has, and without the arrogance to which he has referred?

Lord Sainsbury of Turville

My Lords, although I have spent a very pleasant morning looking up on websites the directorships of many Members of this House, I do not think it is for me to advise Members on how they should carry out their duties.

Lord Razzall

My Lords, does the Minister accept that the answer to the previous question is, "as a Liberal Democrat? After that slightly partisan comment, does he agree that there is a real issue here, particularly in regard to the major listed companies? A pattern seems to he emerging in which chief executives of one company nominate non-executive directors from others; then, as chief executives, they are nominated as non-executive directors to those other companies. Does the Minister accept that the Government's policy—seemingly one of laissez-faire— is perhaps not adequate in modern circumstances?

Lord Sainsbury of Turville

My Lords, I agree that the existence of such cross-directorships is concerning, particularly to shareholders. However, the issue is whether the Government should move in and try to establish how many directorships an individual should have. As I said, it is not possible to do that. I am not aware of any legislation anywhere in the world with that extremely difficult, if not impossible, aim. The issue is of great interest to institutional shareholders. I think that all your Lordships agree that they have a major job to do to stop such situations arising.