CBI warns on damage of fat-cat laws

THE Government will today be warned about the huge damage it risks inflicting on UK Plc if it brings in legislation to attack rewards for failure.

MPs will hear evidence from the CBI calling for self-regulation of boardrooms to continue, arguing that shareholders and directors should be the ones to curb excessive contracts.

But at the same hearings union officials will demand laws be drafted to prevent pay-offs such as the £22m GlaxoSmithKline chief executive Jean-Pierre Garnier stands to receive if fired.

Representatives of the CBI and the TUC will present evidence to the Treasury Select Committee, which is examining the Government's proposals in last month's Rewards for Failure consultation document.

The paper considered legislation and an outright ban on boardroom contracts running for more than a year. It also raised the prospect of strict limits on money companies are allowed to pay for executives' severance.

While the Department of Trade and Industry's paper was welcomed by workers' representatives and Labour MPs, many in the business community accused the Government of a knee-jerk reaction in the face of the public outcry about big payouts.