Executive remuneration has been on the margin of the public agenda in Ireland for some time now. The wave began in America about 10 years ago when it became apparent that executive remuneration was rising at a much faster rate than corporate profits.

During the 1980s the earnings of American CEOs rose by 212 per cent while the average earnings per share of the S&P 500 grew by only 78 per cent. During the same period, average pay of CEOs of the Fortune 500 companies went from 35 times to 157 times that of the average production worker.

The wave hit Britain in the early 1990s when the pay deals for the executives of some of the newly privatised companies became the subject of some controversy. The response in both America and Britain has been to increase the level of detailed disclosure demanded of directors in their annual reports to shareholders.

In Ireland, little is known about chief executive and board remuneration packages. Section 191 of the Companies Act 1963 provides that the emoluments of the directors be disclosed to the shareholders in aggregate only.

The justification for the mandatory disclosure stems from the agency relationship which is the essence of the modern corporate structure. The directors as agents of the shareholders/principals are obliged to disclose any financial interest in, and compensation earned from, the assets of the principals. Put simply, mandatory disclosure should keep agents honest.

Taking a lead from the London Stock Exchange which now requires listed companies to disclose the total remuneration packages of all directors on an individual basis, the Minister for Enterprise and Employment, Ms Harney, let it be known that she favoured a similar response here.

If this does not come about, she has threatened to take the very simple expedient of amending Section 191 of the 1963 Act to mandate it. Since she made her wishes known, there has been a flurry of activity by interested groups.

The Irish Association of Investment Managers, financial journalists and financial analysts favour more detailed disclosure and, not surprisingly, directors oppose it. Private shareholders are assumed not to care, but this is an untested assumption.

The Irish Stock Exchange is caught in the middle. On the one hand it does not wish to upset the board members of listed companies, on the other, the analysts and fund managers who deal on the market every day are an important and influential constituency.

Recognising the inevitable, directors have been busy spinning a web - warning of wage inflation, disincentives to public flotation and exposure to kidnapping. And, if a recent report in The Irish Times is accurate, some listed companies wish to maintain secrecy in order to be able to pay different amounts to individual directors without this being known to others. One wonders about the effectiveness of a board where this level of secrecy is seen as acceptable.

The issue boils down to this; public company directors have become accustomed to a regime where information about their remuneration remained private. Today, their right as individuals to privacy and the right of shareholders as principals to agent-specific information are being pitted against each other.

Given the structure of Irish company law and the freedom of information climate, the weight of argument almost certainly favours the shareholder. This is so even if, as one suspects, shareholders have so far given little, if any, thought to what to do with this additional information.

There are a number of good reasons why more detailed disclosure about individual directors' remuneration packages is desirable and why the Minister should use company legislation to achieve it.

Disclosure is more effective than other mechanisms in ensuring against over-compensation. The alternative of relying on a Compensation Committee comprising so called independent non-executive directors is a sham. Ironically, in Ireland, the only group that the independent director is independent of is the shareholder. Non-executive directors are elected by management, owe their continued tenure to management and share the same ideology as management.

Disclosure will create a better climate of openness between directors and shareholders leading ultimately to greater trust.

Disclosure will increase shareholder activism - something that is in short supply in Irish public companies.

Disclosure of individual director's salaries will permit ongoing comparison to be made between pay and corporate performance and facilitate explicit linking of the remuneration packages to results.

Finally, legislating for more detailed disclosure with a one-size-fits-all provision requires only a simple amendment to existing company law and is an effective way of ensuring compliance.

Gerard McHugh is a Senior Lecturer in the School of Business, Trinity College, Dublin