An investigation into the remuneration of company executives will be opened by MPs reacting to a series of "fat cat" pay scandals.
The Trade and Industry Select Committee will consider whether there should be tax penalties to deter contracts that provide huge pay-offs for "failing" bosses, whether such rewards are necessary for British business to compete, whether they "demotivate" executives and whether legislation is needed to curb boardroom excesses.
The inquiry will begin immediately after the Government publishes its delayed consultation document on boardroom pay in the next few weeks. In public hearings, the all-party committee will question Patricia Hewitt, the Trade and Industry Secretary, the Confederation of British Industry, the Institute of Directors, other business groups and the Trades Union Congress. Formal recommendations will be published by the committee in the autumn and its report could increase the pressure on the Government to act.
Despite repeated threats by ministers to intervene, the forthcoming Green Paper is expected to reject legislation to allow company boards to overturn massive pay-offs to poorly performing directors. While ministers will keep the issue under review, they would prefer business to strengthen its own voluntary code.
Martin O'Neill, the committee's Labour chairman, told The Independent yesterday: "I am concerned about the understandable resentment caused, especially by the rewards for failure. I am also annoyed at the arrogance of some of the recipients of these rewards. This goes against all the talk we hear about corporate social responsibility."
He added: "A number of these firms employ people across the world who are not well paid. If they want to retain some kind of social cohesion within their enterprise, then they ought to be sensitive to the needs and aspirations of these people."
Referring to The Independent's coverage of the executive pay issue, he said: "The press coverage of the excesses has certainly heightened public awareness of it. It is assuming a different proportion to the fat-cat scandals of the 1990s. Many of those were dealt with by regulation and naming and shaming. But I think now we are talking about the need to examine the culture behind some of the awards and see how you change your culture, which you can't always do just by the stroke of a pen."
His committee would run in public the consultation process conducted in private by the Department of Trade and Industry. He hoped the MPs' proposals would encourage a thorough public debate and "concentrate the Government's mind".
This week the TUC will urge shareholders at HSBC bank's annual meeting to vote against a "platinum parachute" for the company's executive director William Aldinger. Mr Aldinger, 55, joined the board last month on a £37m package that made him the highest-paid executive in Britain.
Kingfisher acts; Fat-cat flashpoints, page 15
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