Recommendations to be issued on directors' pay

The Irish Stock Exchange (ISE) plans to issue its recommendations on disclosure of directors' remuneration, to the Tanaiste, Ms Harney, by the end of August, Mr Tom Healy, ISE's chief executive has told The Irish Times. He would not comment on the findings of an ISE survey on the views of publicly quoted companies. However, that survey has been completed and the majority of the directors are understood to have expressed opposition to providing more information on directors' pay. If these views are adopted by the ISE board, it would represent a direct confrontation with Ms Harney who has warned that legislation could be introduced if publicly quoted companies do not follow the guidelines issued by the Irish Association of Investment Managers (IAIM).

The ISE board, chaired by Mr David Kingston, is expected to consider the findings of the survey shortly. Mr Healy in a letter sent to each listed company, as part of the survey, had invited submissions. The letter stressed it would be preferable to have a series of alternatives to propose to Ms Harney rather than risk the imposition on the issue.

"If the Tanaiste gives us an opportunity to negotiate on her preferred level of disclosure, we will need to have alternatives to propose".

The letter also said resisting change was not a realistic option as it would likely result in legislation. It was issued after the ISE had considered the IAIM guidelines.

Mr Kingston had written to Ms Harney before she issued a public warning about disclosure. In it he said companies had not opted for full disclosure last year because of the needs of quoted companies "to be able to pay different amounts to individual directors without this being highlighted publicly, or even known by the individuals concerned". Another reason was a requirement for individual disclosure "in a small business community would be an enormous disincentive to companies considering going public".

Mr Harney in reply said keeping the details of individual directors' remuneration "secret" in order to stop below-board demands for pay increases "could be regarded as deliberately lacking transparency to avoid criticism".