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New High Pay Centre report: Performance-related Pay is nothing of the sort

Research for High Pay Centre by Incomes Data Services shows that growth in executive pay, bonuses and incentive payments has vastly outpaced performance as measured by every indicator in common use

A new report published today by the High Pay Centre think-tank shows the shocking failure of attempts to link the pay of Britain’s leading company executives to their company’s performance.

Analysis of pay data and key company performance metrics found that between 2000 and 2013, the median earnings of a FTSE 350 Company Director increased more than twice as fast as median pre-tax profits at FTSE 350 companies and four times as fast as their median market value. FTSE 350 Directors’ pay grew nearly twice as fast as pay for all full-time UK workers.

The report also found that:

The findings are likely to increase criticism of excessive executive pay awards and lead to calls for further action to curtail pay at the top.

High Pay Centre Director Deborah Hargreaves said: These figures show that shareholders are not getting what they think they are paying for. Executive pay is supposed to be linked to corporate performance so that directors' incentives are in line with shareholder interests. However, the sharp rise in pay for those at the top of our companies has far outstripped investors' returns as well as pay for everyone else in the business.

This is further evidence that pay at the top has become a self-enriching racket for those lucky enough to be in the right place at the right time. Government needs to act to ensure that pay increases for those at the top reflect company performance and are proportionate to pay levels for low and middle-income workers.

Notes to editors:

 

Download report

Posted on 23 October 2014

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