A collection of discussion papers exploring new ideas around performance-related pay, including Peter Montagnon’s plan that execs should be paid in cash and required to buy shares that they hold for 10 years
Prof Sandy Pepper from the London School of Economics told a High Pay Centre event to launch our new essay collection that there were 1.2m items on executive pay under a Google Scholar search. “But I’m not sure the sum state of human knowledge is advanced by all this work.” Prof Pepper believes the system for executive pay in the UK is broken and needs creative thinking.
Peter Montagnon told the meeting the problem with chief executive’s pay is that we don’t know how much it’s worth. He suggests executives should receive cash and use that to buy shares in their company, rather than be given shares as at present.
The discussion focused on the problems of aligning executives’ interests with those of shareholders – the holy grail of performance-related pay. But many feel that this is not possible.
The essays explore some new thinking on executive pay and will contribute to the debate around performance-related pay which is part of a project conducted by the High Pay Centre and funded by Lord Sainsbury. Further reports including a look at what is meant by exceptional performance and a poll of Institute of Directors’ members will be released next year.