Exchange holds up pay rules

PETER RODGERS

Business Editor

The Stock Exchange yesterday bowed to pressure from industry and delayed full implementation of the Greenbury Code on top pay, because of difficulties in framing some of the rules.

Provisions to force companies to seek shareholder approval for long-term incentive schemes were among those put off until next year for further consultation

Other measures delayed were the new rules that phase the granting of options, a ban on the issue of options at a discount, and the recommendation that the full value of directors' pension entitlements is disclosed.

The decision follows protests from companies about what some claim was the high-handed way the exchange put out draft changes to the listing rules - the Yellow Book - at the end of July, inviting comments on relatively minor variations only.

The exchange said it had received 170 replies to the consultative document and had revised its proposals to reflect them.

As well as the details of some new rules being delayed until the first quarter of next year, those that have been agreed will not now come into effect until 31 December, rather than the planned date of the end of this month, to give companies time to familiarise themselves with the requirements.

The new rules that have been agreed - and published as an official revision of the Yellow Book - force companies to increase the disclosure of directors' earnings, as the Greenbury committee recommended.

They also oblige companies to make a statement of compliance with the Greenbury recommendation that remuneration committees should be given a new independence - a sensitive area because the Greenbury report could lead to the creation for the first time of a separate class of directors on company boards, with their own responsibilities.

Company law states that all directors have equal responsibility for running a company. One company chairman said the changes could amount to the first step towards establishing supervisory boards in Britain.

The rules in the revised Yellow Book also oblige companies to make a statement that full consideration has been given to the best practice provisions on remuneration policy, service contracts and compensation.

Another consultative document will be issued at the end of the month.