Executive remuneration not working for investors - 9 Oct 2009

Executive remuneration not working for investors

9 October 2009

Performance-related executive remuneration is not working the way shareholders envisage, according to a new report.

The proxy voting agency Manifest has compiled a
review into the compensation structures of FTSE 100 chief executives
alongside a specialist on the issue MM&K.

This discovered that remuneration packages related
to performance are often designed to keep executives satisfied by being
too easy to hit and below market expectations, the Telegraph reported.

To illustrate this trend, the report highlighted
that in 2008 the FTSE 100 index declined by 30 per cent, while average
salaries for chief executives rose by eight per cent and incentive
awards increased by four per cent.

According to the newspaper, the pay review
concluded that remuneration committees must assign less emphasis on
motivating director-level staff and more on meeting long-term financial
targets.

It read: "Most plans are designed to generate the
sort of pay levels sufficient to keep senior executives satisfied, with
only limited upside and downside for performance."

Last month, similar findings were made by the corporate governance specialist Pirc, which discovered that executive pay

more...http://www.odgersberndtson.co.uk/index.php?id=822&L=9&tx_ttnews[tt_news]=1653&cHash=6d389ac46d