The Tanaiste and Minister for Enterprise, Trade and Employment, Ms Harney, has warned she will introduce legislation compelling detailed disclosure of directors' remuneration if the Irish Stock Exchange and public companies do not voluntarily amend their rules to require such disclosure.
Currently Irish public companies are only required to reveal the aggregate remuneration paid to executive and non-executive directors and full disclosure of remuneration has been strongly resisted in the past by the Irish Stock Exchange and the Institute of Directors.
Speaking at a function where she endorsed new Irish Association of Investment Managers (IAIM) guidelines on corporate governance, share options and incentive schemes, Ms Harney said: "Perhaps it can be done without legislation but, if not, I would intend to bring in legislation subject to Government agreement. I'm sure the Stock Exchange will be positive in its response."
Ms Harney said shareholders had every right to know what directors were paid and said: "If the Taoiseach has to disclose his financial affairs, it's not reasonable for directors of public companies to be excluded from a regime of openness, transparency and accountability."
Irish Stock Exchange managing director Mr Tom Healy said yesterday the exchange would examine the new IAIM guidelines and the Tanaiste's comments, but added that the exchange's current listing rules allowing aggregation of directors' remuneration were reviewed last year. The existing rules go further than company law requirements, he added, and London was the only exchange in Europe which had such demanding disclosure rules.
He also warned that detailed disclosure of what directors were paid could act as a disincentive to companies thinking of going public and damage the overall development of the market.
The director of the Institute of Directors, Mr Niall Moloney, was reluctant to comment on the new IAIM guidelines and the Tanaiste's comments but said: "Anything the Minister says will be looked at very carefully."
Privately, however, many public company directors are resigned to the fact that either voluntarily or by legislation, they will soon be compelled to reveal exactly how much they are paid.
Many object strongly to the idea. "Doing this would simply indulge the prurient interest of the public," said one company director.
However, the chairman of the IAIM's capital markets committee, Mr Martin Nolan, said the association would "strongly urge the [Irish] exchange" to adopt its proposals.
The revised guidelines from the IAIM also deal with share options and incentive scheme guidelines. Mr Nolan said the guidelines promote the whole concept of wider share ownership and allow more flexibility in the type of share incentive schemes that companies can use and a more relaxed regime for smaller companies. He added that studies in the US showed that companies with employee ownership plans grew faster than other companies.
The revised IAIM guidelines allow companies to issue up to 15 per cent of their shares for incentivisation schemes (up from 10 per cent), as long as a minimum of 5 per cent is reserved for employee share schemes, with more flexibility for smaller companies.
