How to end excessive pay?

Everybody has an opinion on executive pay, and we want to hear what you think and why.  

Critics say that there has been a market failure, and institutional investors and executive search agents are often blamed.  Is high pay the only way that organisations can attract and retain talent? Should the government intervene or would that result in an exodus of talent from the UK?  Do business leaders add sufficient value which justifies what they get paid? 

We think that only acknowledging that there is a problem in egregious cases of 'rewards for failure' is insufficient, but where do we go from here? 

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  • This is such an emotive and challenging topic and in today's society it is hard to justify some of the numbers that people are paid in comparison to the UK's average. But that does not mean that we should assume that all Main Board Directors are over paid.

    If we compare the average salary of a Main Board Director to other experts in their field - actors, newspaper editors, musicians, sports stars, investors, Accountancy Partners, catwalk models and so on, then the rewards they get look less 'excessive'. And if you compare what them to their counterparts in the US the same is true. Excessive is a word that requires comparison and yet these comparisons are rarely made.

    Secondly - the solution needs much greater dialogue between shareholders and Boards. Yet this does not happen enough. And it requires a common view to be adopted by shareholders. To give one example - LTIP v restricted stock. Many, many remuneration committee's would love to move from LTIP to restricted stock. It would reduce the overall remuneration quantum substantially and would help drive longer term focus. But many shareholders won't move to that scheme because the governance arms worry about payments made in the event of the share price falling. Well - you can't have it both ways.

    This is a very vey complex subject which we can't solve with simple one liners. If your policy is comply or explain, then people have to be open to an explanation.
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