Rudd advocates share option 'handcuffs' for executives

Sir Nigel Rudd, the chairman of the CBI's new taskforce on boardroom pay, yesterday suggested that directors could receive far more of their payment in shares, which they would be prevented from selling until they leave their posts.

The move would be a de facto punishment for executives who drive businesses into the ground because they would be left with a load of shares on their hands whose value had been greatly reduced.

Sir Nigel, who will in September add the chairmanship of Boots the chemist to a string of high-profile posts, is one of the most pro-business voices in the City.

Yet he and other business figures have resolved they must formulate ways to curb overly generous bonuses and so-called payments for failure in UK boardrooms in an attempt to head off plans by the Government to enforce more restraint through legislation.

The CBI's committee also includes Sainsbury's chief executive Sir Peter Davis, Unilever's chairman Niall Fitzgerald and Sir Victor Blank, the chairman of Trinity Mirror.

The committee is planning to submit a blueprint for how companies could be persuaded to rein in the worst excesses of boardroom pay to the Government once it has published its own consultation document in the next few weeks.

Sir Nigel, who is also the chairman of Pilkington and Pendragon and, until the end of the year, Kidde, suggested that directors could receive more of their remuneration in the form of shares.

The business veteran is himself paid entirely in shares by the glass maker Pilkington, which he cannot cash in until he leaves the company.

"If under my stewardship of Pilkington the business was driven into the ground, that would affect my pay," Sir Nigel said.

He emphasised that the radical position was his personal view, but added that it was "one area I want to explore" with the CBI's taskforce.