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Monday, 10 September, 2001, 15:41 GMT 16:41 UK
Unions press for 'fat cat' sanctions
Money
Unions are angry about "fat cat" payouts
Unions are pressing the government to take action against huge payoffs for "fat cat" executives of companies with falling profits.

The calls for legislation from delegates at the TUC conference in Brighton come after the rumoured 1m payout to Lord Simpson, former chief of troubled telecoms firm Marconi.


There needs to be sanctions to prevent businessmen who put thousands of jobs at risk from taking lottery-sized payouts as reward for failure

Roger Lyons
MSF general secretary
Trade Secretary Patricia Hewitt said it was not sensible for the government to "rush around and try and solve every problem", although executives ought to share the pain of redundant workers.

Foreign Secretary Jack Straw, fresh from a speech encouraging corporate responsibility internationally, said the payments damaged the reputation of business but argued that legislation posed problems.

'Absolute disgrace'

Calls for new legislation to combat big pay-offs are being headed at the TUC conference by Roger Lyons, general secretary of the Manufacturing Science and Finance Union.

He said: "Payments like this - for failure - are an absolute disgrace.

Lord Simpson, former chief executive of Marconi
Lord Simpson is getting a 1m payoff
"It is the worst kind of fat cattery in the history of British industry.

"There needs to be some form of sanctions to prevent businessmen who put thousands of jobs at risk from taking lottery-sized payouts as reward for failure."

Trade Secretary Ms Hewitt said business leaders behind big success were entitled to big rewards.

"But when you've got people losing their jobs and investors losing their money, they ought to be sharing the pain," she told BBC Radio 4's Today programme.

"Failing executives should not be getting the kind of rewards that some of them are getting and some of them are taking."

It was up to each company's board and shareholders to prevent such episodes, however. "A lot of shareholders, a lot of the big pension funds, for instance, are becoming much, much more active and are sorting out the contracts on which they employ these executives."

Corporate duty

During a speech in Manchester Jack Straw stressed the need for a proper balance between the individual as a consumer in a global market and as a citizen.

There was a role for governments, he said, continuing: "We must do what we can to encourage corporate responsibility: we cannot leave companies to regulate themselves globally, any more than we do in our national economies."

Mr Straw said he did not approve of such pay-outs and would vote against them if he was a shareholder.

"I think it's very damaging for the reputation of business in this country for such things to happen," he said.

"That is my opinion... that is different from saying that as a result of that government and parliament should legislate to prevent it happening. Then you come onto the issue of the power of shareholders and so on.

"I think what we will see from this case is increasingly companies recognising their corporate responsibility, if you like their enlightened self interest."


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See also:

07 Sep 01 | Newsmakers
05 Sep 01 | Business
10 Sep 01 | Politics
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