The Government risks reopening divisions if it presses business leaders to develop joint guidelines on directors’ contracts.
The warning from business groups followed a report into boardroom pay unveiled by Patricia Hewitt, trade and industry secretary, which showed that excesses had been contained by shareholder activism.
Hewitt called on the main industry lobby groups to draw up a “common set” of best practice guidelines on directors’ contracts by the end of the year.
However, the Association of British Insurers and the employers’ group the CBI both played down the prospect of developing a detailed common approach.
Peter Montagnon, ABI head of investment affairs, said it would be “nervous” about developing a “line-by-line” agreement with the CBI.
The ABI already publishes joint guidelines on directors’ contracts with the National Association of Pension Funds, the third organisation cited by Hewitt.
Montagnon told the Financial Times: “The three organisations already have a large degree of common thinking. But we would be nervous about any agreement that might end up watering down our conditions. A great deal has been achieved and we don’t want to unpick all the good work that has been done.”
John Cridland, CBI deputy director-general, told the Financial Times: “We have developed guidance for our members on how they deal with severance pay. Business is quite happy with the advice it is getting and we do not see the need to do more at this time.”