Fighting to keep secrecy on pay

It is an old maxim that one should only bet money on the stock market that one can afford to lose. Sensible advice, but I would still have taken a sizeable flutter at any odds that the men and women who run those public companies would come out against the proposal to increase transparency vis-a-vis directors' remuneration.

And so it emerged, as Dr Paddy Galvin, president of the Institute of Directors of Ireland, told this week's annual dinner of the institute that such disclosure would "serve no purpose and would inevitably be pay inflationary".

Hold on here. Such a change would at least allow shareholders to know the precise value the company puts on the performance of individual executives and encourage those executives not to carry dead wood. Equally, there is no reason why such knowledge should be pay inflationary, as it is generally accepted that directors are entitled to reasonable pay for their efforts on merit. Transparency would allow both they and their shareholders to assess better what that level of remuneration should be, rather than such decisions being taken behind closed doors. It is no more likely to be pay inflationary than the current cloaked system. Those opposed to change, including the Institute of Directors, continually harp on about the fact that the disclosure rules at present are stricter than those of most of our European peers and point out that the rules currently sought exist only in the US and Britain.

They miss two points. The first is that we should be aiming for the highest standards of corporate governance, not the lowest common denominator. More importantly, the very markets whose high standards we disparage are those from which we seek crucial investment in Irish companies, through institutional investors or even local stock listings.