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Mr. Marshall: The hon. Gentleman has referred to Ford and Vauxhall and has said that their UK executives should be subject to more stringent disclosure than their United States executives. He also said that disclosure in the UK is ahead of other countries. Does he seek to encourage motor car companies to locate in Britain by saying that their executives in this country will be subject to more rigid rules than in other countries? Is that designed to encourage overseas companies to come to this country?
Mr. Cousins: The hon. Gentleman's intervention significantly gives the game away. If it is the intention of the Government or any of their supporters to create two entirely different regimes of corporate governance with different standards of disclosure--one for companies based in this country and another for companies based abroad--an enormous perverse incentive has been created for the relocation of central company decision making in other foreign governance regimes. We should be seeking to establish a corporate governance regime that applies to all the major operators in the country and sets standards of practice here for the rest of the world to follow.
I think that I already have the answer to the question that I am putting to the Minister. I think that the Minister is happy for there to be major unlisted companies--located sometimes abroad, sometimes in this country--that will not have to follow the regime of disclosure that the House is discussing tonight.
Mr. Bell:
Does my hon. Friend agree that the corporate governance in the US is more transparent than in our country? The other day, Michael Eisner of Disney had to answer to shareholders for his remuneration. Would it not be pleasant to see more of that in our own country?
Mr. Cousins:
My hon. Friend is right. If any significant company in this country were exposed to the sort of shareholder activism practised by a major American pension fund such as the California state employees' pension fund, it would be horrified at the degree of accountability that is enforced there--not just through attendance at annual general meetings, but through constant and rigorous scrutiny of activities and developments. In many important ways, the California state pension scheme provides an example to the world of intelligent, well-directed, inspired shareholder activism. In many important ways, the draft regulations do not take us towards that objective, but rein us back. At best, they represent one cheer for shareholder democracy. As my 6.56 pm
Mr. John M. Taylor: The hon. Member for Middlesbrough (Mr. Bell) said that the House was depleted in number tonight because some of his colleagues were already on the hustings. If so, they had better beware the Representation of the People Act 1983, lest they should have started incurring election expenses already--but that was a topic for the previous debate. As always, the hon. Gentleman was a generous debating opponent; it is always a pleasure to debate with him, even though we do not always find large measures of agreement. He was good enough to say that the subject was technical and that it might be necessary to come back to some of the issues later--and I do not mean on the Floor of the House. If any of my colleagues who have followed the debate, from either side of the House, feel that I do not address all the technical issues in my winding-up speech, they should feel free to write to me. I promise to address the points that they raise.
The hon. Member for Middlesbrough seemed to have doubts about offering different treatment for listed, unlisted and the smallest companies. It is natural to provide different treatment for those companies because they are different. It is right that a higher level of disclosure should be called for from listed companies than from unlisted companies.
I shall try to deal with the argument advanced by the hon. Member for Newcastle upon Tyne, Central (Mr. Cousins) as directly as possible. He postulated the theory--in fact, he did not merely postulate it as we know that it already happens--of a utility that is privatised, or floated, and subsequently taken over by an overseas company. In such a case, full information relating to the remuneration, shares and share options of directors of the utility at the time of the takeover bid will be published in accordance with the rules of the takeover panel.
After the takeover, if it happens, the utility is likely to become a wholly owned subsidiary of the overseas parent. It will be subject to the same rules as any other unlisted UK company--it must disclose the emoluments of the directors in aggregate and, if the aggregate figure exceeds £200,000, the emoluments of the highest-paid director. If any directors lose office as a result of the takeover, the accounts must show the aggregate amount of any compensation paid, including the money value of any non-cash benefits.
After the takeover, it is unlikely that the directors of the utility will hold share options in the utility as all the shares are likely to have been acquired by the parent company as part of the takeover process. In other words, the subsidiary would be reduced to having one shareholder. Greenbury is about disclosure of information about directors to shareholders, and the single shareholder will know all about the directors because it will own the subsidiary for which they work--indeed, it will almost certainly set their terms of employment. The remuneration of the directors of the utility following the takeover,
including any special features which could conceivably extend to share options in the parent, will be a matter for the parent company as sole shareholder. The directors of the subsidiary will of course no longer have the ability to determine their own remuneration. The parent company will have full access to relevant information, without needing to rely on statutory disclosures.
The hon. Member for Middlesbrough said that, as a trustee--presumably of an estate or settlement; I know not what and it is not my business--he found that the Inland Revenue had been swift to seek a valuation of unlisted shares in certain circumstances, such as a sale or disposal for capital taxes. In the event of a disposal, a valuation is required; that is almost certainly a proper part of revenue law, but it is quite another matter to require the value of those shares to be calculated every year for accounts purposes. That would be expensive for unlisted companies and we are not in the business of making life more difficult for unlisted companies. The hon. Gentleman might also want to reflect on the fact that changes to company law requiring shareholders to vote or to declare their voting record will require primary legislation.
I am under injunction from the silent ones to move on--I know their authority in this place and there will be no second-guessing from me. In conclusion, I simply want to say that I am no supporter of fat cats; I have no appetite for such matters and the Prime Minister has declared similar sentiments. Whereas we are well up with the European average--in fact, we are roughly typical of the European average--for executive pay, we are well below the levels seen in the United States of America.
The hon. Member for Middlesbrough says that he will build on Hampel, but it is we who will be watching the developments on Hampel. As another successful exercise following the comparable successes of Cadbury and Greenbury, we shall be here to deal with them as we are doing tonight.
Question put and agreed to.
Resolved,
Motion made, and Question put forthwith, pursuant to Standing Order No. 101(6) (Standing Committees on Delegated Legislation),
That the draft Company Accounts (Disclosure of Directors' Emoluments) Regulations 1997, which were laid before this House on 6th February, be approved.
Madam Deputy Speaker (Dame Janet Fookes):
With permission, I shall put together the motions relating to delegated legislation.
That the draft Jobseeker's Allowance (Workskill Courses) Pilot Regulations 1997, which were laid before this House on 28th January, be approved.
3 Mar 1997 : Column 679
That the draft Jobseeker's Allowance (Project Work Pilot Scheme) Regulations 1997, which were laid before this House on 5th February, be approved.
That the draft Jobseeker's Allowance (Project Work Pilot Scheme) (No. 2) Regulations 1997, which were laid before this House on 5th February, be approved.
That the draft Jobseeker's Allowance (Contract for Work) Regulations 1997, which were laid before this House on 13th February, be approved.
That the draft Social Security (Jobseeker's Allowance and Mariners' Benefits) (Miscellaneous Amendments) Regulations 1997, which were laid before this House on 17th February, be approved.
That the draft Contracting Out (Functions of the Registrar General in relation to authorising re-registration of births) Order 1997, which was laid before this House on 11th February, be approved.
That the draft British Gas plc. (Rateable Values) (Scotland) Amendment Order 1997, which was laid before this House on 11th February, be approved.
That the draft Non-Domestic Rating (Chargeable Amounts for Small Hereditaments) Amendment Regulations 1997, which were laid before this House on 12th February, be approved.
That the draft British Gas plc (Rateable Values) (Amendment) Order 1997, which was laid before this House on 12th February, be approved.
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