UK Government Urged Not To Legislate On 'Rewards For Failure'

by Robin Pilgrim, LawAndTax-News.com, London

25 September 2003

In a joint submission to the UK Department of Trade and Industry on Tuesday, the Association of British Insurers (ABI) and the National Association of Pension Funds (NAPF) called on the government not to legislate on so-called 'rewards for failure' often offered to departing executives in failing companies.

Both organisations reportedly intend to review their guidelines in this area, as well as on contract lengths for high level executives by the end of the year, and believe that the issuing of new guidelines, as opposed to legislation, is the way forward.

"A significant number of companies have told us they are altering their contracts and policies as a result," the ABI's head of investment affairs, Peter Montagnon announced, continuing: "This is certainly a better way forward than legislation, which can be inflexible and encourage people to look for loopholes."

This follows a similar call from the Confederation of British Industry, which last week issued a set of six 'best practice' guidelines in an attempt to forestall government legislation on the issue.

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