Board Pay - less Understanding and more Action

The highly detailed and interesting report by Hedley May gives useful insights into the fact that (UK) shareholders and company directors hold diametrically opposed views on executive pay and board-room performance.

This should be no surprise to anyone who is following the (endless?) discussions about how to improve corporate governance and (top) executive compensation.

What is somewhat dispiriting is the glacial progress that is being made towards keeping a lid on the ever-growing pay packages that are awarded to CEO's.

Reference to the need for companies and investors to come to a 'greater understanding' on this issue already point to a major obstacle. It is a misconception that CEO's and boards (that are basically at their beck and call) and shareholders are in opposing camps. This overlooks the basic fact that ALL executives are the hired employees of the shareholders.

It is up to shareholders to set the rules. As the top 50-100 investment institutions hold a de-facto blocking minority in all major listed companies it should be easy to agree on some basic and simple rules with respect to executive pay levels. There should not be need for compensation schedules for the favored few at the top that run to dozens, sometimes even 100+ pages.
More and more reports on this problem (which is just the tip of the global inequality iceberg) will be useless if institutions do not face up to the challenge. Any number of politicians are ready to impose (often counterproductive) regulations if no concerted action is taken.
To rely on remuneration consultants to lead the way on this endeavor is tantamount to letting the fox guard the chickens.

I look forward to read your suggestions - please post them on the Blogsite. Alternatively I will post any comments that reach me by email.
12-Nov-2013