The Department of Trade and Industry (DTI) has decided to scrap the possibility of publishing a white paper on excessive payouts to departing directors.
In June last year, the DTI launched a consultation entitled ‘Rewards for Failure’ looking at the issue of directors’ contracts, performance and severance payments, following numerous media scandals about directors receiving golden parachutes.
The consultation paper offered two possible routes to achieving greater accountability in relation to the compensation and severance of directors. It was suggested that it could either revise best practice guidelines or introduce legislative change.
It is understood that the Government is now opting against legislative change. One source suggested that the reason may be because the DTI wants to first make decisions on company law reform and on the results of its consultation on director and auditor liability, which is currently live.
The other problem for the Government is that it is a very difficult matter to legislate. It is thought that the DTI will make an announcement on the issue sometime in February.
A spokesperson for the DTI would not confirm or deny whether a final decision had been made on the white paper, saying only that the organisation would “consider the responses to the consultation and give its response at a later date”.