Vol. 504 No. 5
27 Mr. S. Ryan asked the Tánaiste and Minister for Enterprise, Trade and Employment when she will introduce legislation to compel detailed disclosure of directors' remuneration of public companies; and if she will make a statement on the matter. [12221/99]
I have publicly stated my views on the issue of disclosure of directors' pay and remuneration. I believe that at a time of increasing globalisation of our capital markets, maximum accountability and transparency are essential in order to ensure investor confidence both nationally and internationally. The Stock Exchange only requires disclosure of directors' remuneration on an aggregate basis. I believe that full disclosure of remuneration of each named director is a desirable development and is not unusual in other jurisdictions. It is in the best interests of all the members of a company that the annual reports of Irish registered Irish listed companies should show the individual remuneration packages paid to directors.
I have already said that I would prefer to see the Stock Exchange's rules on disclosure of directors' pay being revised voluntarily. The Stock Exchange has acknowledged that its rules on disclosure must be reviewed with possible consequential changes. While I welcome this, I wish to see positive action taken on this matter by the Stock Exchange within the next month or so. I will be meeting with the Stock Exchange towards the end of this month to discuss the matter. If necessary, however, I am prepared to use the statutory route in the context of ongoing com pany law reform in order to secure progress on this issue.
The Minister indicated a couple of months ago that she had scheduled a meeting with the Institute of Directors. Has that meeting taken place and if so, what was its outcome?
I did not have a formal meeting with the Institute of Directors. I met a group from the Institute of Directors, as the Deputy probably knows, and they made no secret of their opposition to what is being proposed. They do not believe it right that they should be forced to disclose individual directors' remuneration packages. I will meet the Stock Exchange on 27 May to discuss this and other matters. I feel very strongly about this issue. The Investment Managers' Association has recommended change and they are responsible for approximately £100 billion worth of investment. There is individual disclosure in Northern Ireland, Great Britain and the United States. Corporate governance and good practice requires us to do this here and it would be better if it were done voluntarily. However, the view of the Institute of Directors, as expressed by their president, Mr. Patrick Galvin, at their recent annual dinner – I have read his script – is, unfortunately, that they strongly oppose movement in this direction.
In view of the fact that the Companies (Amendment) (No. 2) Bill, which relates to non-resident, Irish registered companies and the number of boards on which directors may serve, is due before the House shortly, does the Minister consider it a vehicle for a change in the law regarding the remuneration of directors? If she waits until she has concluded her discussions with the Institute of Directors and the Stock Exchange she may miss this opportunity to make a change, if she intends to do so.
I would prefer if change were brought about on a voluntary basis. Other legislation relating to company law is being prepared at the moment. I believe the response of the Stock Exchange will be positive. A number of people are in favour of change and if agreement can be reached later this month to introduce change on a voluntary basis, that would be the preferred option. We can legislate for change subsequently but if a course of action is agreed it is unlikely ever to change. That is always the best way to bring about change.
Does the Minister believe that this matter is best left to self-regulation? Apart from indicating that it is of the opinion that a review is necessary, has the Stock Exchange indicated to the Minister what its position on this matter is likely to be? Will she give the House an undertaking that if there is procrastination, she might use the Companies (Amendment) (No. 2) Bill to bring in an amendment requiring disclosure?
I will give that undertaking. In other jurisdictions this is done through stock exchange requirements, and that would be the best way to do things here too. The Stock Exchange wrote to me in advance of my address to the Investment Managers' Association pointing out their opposition to this. However, I hope the Stock Exchange is now in a position to change its view in line with what is happening in so many other places. When I meet the Stock Exchange on 27 May I expect to be in a position to discuss the matter and to decide finally if it will be necessary to legislate. Stock exchanges and directors generally always prefer to work on the basis of self-regulation rather than have legislation forced upon them, but it will be if change does not take place on a voluntary basis.
