Consultation on directors' compensation and severance issued

A selection of responses to publication of Rewards for Failure

Association of British Insurers

"We all agree that payment for failure is a serious problem that has to be addressed if we are going to continue to be able to justify a high reward for success. The guidelines produced jointly by the ABI and the NAPF are a sensible starting point and it is up to companies to respond. If they do not rise to this challenge, there is a real risk of legislation that would damage Britain's entrepreneurial spirit. Companies can avoid this by ensuring they do not write reckless contracts which will come back to haunt them." -- Peter Montagnon, head of investment affairs, ABI.

www.abi.org.uk

Confederation of British Industry

"Let no one doubt that business is ready to grasp the nettle on this issue. But transparency and shareholder activism are the ways to police directors' pay, not legislation. Investors are the most credible judges of performance, not the government or the law courts.

Contractual stability must also be protected. We must resolve pay issues when directors join companies, not when they leave. It would be a real own goal to announce to the investing world that the UK is a place where governments retrospectively legislate to change private contracts." -- Digby Jones, CBI director general.

www.cbi.org.uk

Chartered Institute of Personnel and Development

"Organisations should be free to pay the best salaries to attract, keep and motivate the best people. However, for this approach to work, employers need to have rational, justifiable and well-communicated reward policies in place.

Companies need to demonstrate how the reward package is linked to organisational and personal performance that is affordable that it reflects appropriate market rates and individual skills and competencies. It requires employers to be open and unambiguous in their pay decisions." -- Charles Cotton, CIPD adviser on pay and reward.

www.cipd.co.uk

National Association of Pension Funds

"The NAPF welcomes the government’ s commitment to addressing this vital issue and will examine its proposals carefully. However, the NAPF/ABI joint guidance -- published just six months ago -- has already influenced many companies and must be allowed time to take full effect.

To go down the legal route would be like opening a can of worms with issues such as having to define failure in legislation. Legislation should be seen as a last resort and guidelines should be given a fair crack of the whip before the government considers reaching for the statute book.

Legislation at this stage would not necessarily boost the UK’ s corporate governance record, but would add another layer of bureaucracy to an already over-burdened business community. -- Christine Farnish, NAPF chief executive.

www.napf.co.uk

Trades Union Congress

"UK business leaders are now gambling at the last chance casino. Unless they stop rewards for failure, and curb corporate greed they will inevitably face tough legal changes. Investors and the employees whose pension funds they manage want better tools to govern how their money is used." -- Brendan Barber, TUC general secretary.

www.tuc.org.uk