The Perverse Incentives of Modern Management and Remuneration
How the structure of executives pay packages incentivises behaviour that is ultimately damaging the UK economy.
In this paper, leading City economist Andrew Smithers argues that the way senior management are paid seriously damages the economy and that shareholders appear to have received no benefit from the massive rise in the pay of senior executives.
Whether the major part of senior executives' remuneration comes from bonuses or options, the incentive effect is very similar and the metrics of success by which they are judged are share price, earnings per share, or total shareholder returns. This system has encouraged executives to take more risks than before by cutting costs and holding investment in innovation or productivity down, in order to bolster short-term profits and the company share price, to the serious detriment of the overall economy.
Since 1 January 2018 the average FTSE 100 CEO has earned:
Income inequality in the UK
Wealth inequality in the UK
- Speech given by Chuka Umunna MP at IoD Feb 8 2018
Here is the text of the speech given by Chuka Umunna MP at our event held at the IoD on Feb 8th 2018
- Chuka Umunna - how much progress on taming excessive executive pay?
Pamphlet presented by Chuka Umunna MP at a High Pay Centre event held at the Institute of Directors, London, on February 8 2018
- News - Chuka Umunna to speak at HPC event at the Institute of Directors, Feb 8th at 8am
We are delighted that Chuka Umunna has chosen to share his thoughts on "The Progressive Case for Business" on Feb 8th from 8am