Shareholders are becoming increasingly vigilant where executive pay is concerned. Performance-related pay, in the form of annual bonuses and long term incentive plans accounts for about 50% of an executive directors' salary, while 20 years ago it was only 20%. The rest was made up of increases in basic salary and benefits. Only 57% of the FTSE 100 directors achieved their target bonuses last year, but total pay for chief executives rose by an average of 17.6%. This average hides the growing gap in annual pay of individual directors, which makes them a lot more accountable to their shareholders.
Our view:
For all too long many do not have to deliver yet get paid more. This is some professors theory of management that if you pay higher level staff they work harder and if you pay them not enough they work less and if you pay a low level worker too much they work less. Sounds a little capitalist to us! Obviously a theory invented by the hierarchy!