Wednesday, 1 February 2012

Coalition wants to see employee directors on boards?

There was an interesting exchange in the Lords yesterday on executive pay, and specifically how to ensure employees' views are taken into account. From the excerpt below from Baroness Wilcox it appears that the Coalition wants to see employees represented on boards, but can't just appoint them if they aren't directors. So the solution, presumably, is employee directors....? Not entirely sure this is actually Coalition policy.

Baroness Wilcox: The Secretary of State gave a very broad, sweeping statement last week, as my noble friend has already mentioned, which he will be speaking to more and more as the weeks go on. Putting employees on board committees is something that obviously everybody would like to see happen. The closed shop of boards and board committees needs to change and we are taking measures to promote diversity. However, as the Secretary of State made clear last week, bringing people on to board committees who are not also company directors, with the associate responsibilities, is not the way forward.


Alan Brett said...

There is of course nothing to stop companies appointing employee directors already, as FirstGroup have been doing for years! So unless they are seeking to compel companies to do so, no legal change is required. But a Corporate Governance Code provision might start the ball rolling.

Tom Powdrill said...

Hi Alan,

yep totally agree. I don't know how much appetite there is for amending the CG Code along those lines (well, I probably do, very little!). But I think we got quite close to employees on rem comms, so this sort of stuff is in the air...