Executive Pay: another proposal, another non-starter

The former director-general of Britain's CBI makes a number of proposals in an article in the Financial Times. All these proposals have serious flaws: (1) Publishing a single number for compensation of each board member is nice but pointless - the information is already (too well) known. (2) A budget for top overall executive pay will - even if practicable - achieve nothing. Who sets the budget, what is the right amount of pay for the top manager's group? (3) Bringing in independent outsiders to company boards is another non-starter. Is it not required anyway that the majority of board members is independent? and are board members not in any case required to work in the best interests of the company? So the definition of 'best interest' needs modification. (4) Consulting firms may be a negative factor, but who says that all pay is always bench marked in one direction only? Why not use the lowest comparable pay package as benchmark? after all, good business practice means the minimisation of costs, that should include management pay. Anyone frustrated with the efforts of the 'Great and Good' and self-appointed guardians of shareholder interests should get in touch without delay.


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