By stunning insensitivity in the matter of the pay packets, a few directors have hijacked the long-running debate about corporate governance. They have also pushed wide open the door to all kinds of legislative intervention. Now, simple and sensible adjustments in the area of executive pay, such as a requirement that shares over which options are exercised should not be sold except on retirement, will no longer be enough to satisfy politicians and the media.
As a result, both the successor to the Cadbury Committee and the Greenbury Committee find themselves under scrutiny and in a very different position (see Cracking the Cadbury Code p48). Any recommendations which fail to promote substantial change will be dismissed as a whitewash, while some zealously interventionist proposal could swiftly be transferred to the statute book, British business doesn't need more legislation, beyond a non-contentious updating of the Companies Act. What it does need is a clear message from institutional shareholders - and their paymasters the trustees - that they intend to take their responsibilities seriously.