Monday, 9 January 2012

Chief executive pay outstrips company performance

But there was no corresponding rise in the value of their companies, according to the Institute for Public Policy Research (IPPR), which carried out the analysis.
Total remuneration of chief executives increased by 33pc, while the average increase in company value was 24pc, the think tank said.
The figures are based on companies' individual year-end periods, which could have ended in December 2010 or March 2011.
The IPPR said reforms to tackle "excessive" boardroom pay should go beyond "shareholder activism".
The report comes as David Cameron, the Prime Minister, has pledged to crackdown on out-of-control salaries by granting shareholders the right to veto top pay and perks.
Nick Pearce, director of IPPR, said: "This new analysis confirms that boardroom pay is running far ahead of company performance in many of the UK's major businesses.
"Attempts to link pay to performance haven't worked well because it's hard for shareholders to monitor the performance of individual executives.
"Instead, pay deals for top earners have become increasingly complex as well as increasingly generous.
"Tackling excessive top pay should include steps to ensure that employees get a fairer share of rewards.
"To reflect the contribution that all employees make to company success, we should make sure that employee representatives sit on remuneration committees and that boards report to all staff annually on pay levels across the company."
However, hitting back at proposals from Mr Cameron, the Institute of Directors said allowing shareholders to reject a wage or bonus would create a litigious minefield that could also damage a company's ability to attract top-notch directors.
"It wouldn't be practical or a good idea after the remuneration committee had set pay, not only from a legal point of view but recruitment, too," a spokesman said.

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