§ Mr. Arthur Lewisasked the Prime Minister if she will take steps to extend her policy of encouraging wage and salary restraint in the public and private sectors so as to bring within its ambit the large payments for compensation made by companies to company directors for loss of office, in view of the fact that these large sums are passed on to the consumer with consequent increase in inflation.
§ The Prime MinisterCompensation payments to company directors, other than amounts payable as compensation for a breach of a director's contract with a company, should reflect what companies can afford in the light of financial and economic circumstances; and company law provides that such payments can be made only with the approval of the shareholders. Further, so as to provide proper control over the amount of compensation payable for breach of contract, Section 47 of the Companies Act 1980 requires the approval of shareholders to any agreement giving a director the right to be employed for more than five years.