A three-pronged offensive is being launched forcing companies to lift the lid on the practices used to calculate top executives’ pay in their annual reports.

Finance chiefs are among the highest paid earners on corporate boards, but the grey area surrounding how remuneration committees work out the reward structure has frustrated investors.

The lack of clarity relating to executive pay formulas, which can include highly intricate share, pension and incentive schemes has been studied by PricewaterhouseCoopers, CIMA, and corporate reporting consultants Radley Yeldar.

In releasing its Report Leadership paper this week, the trio unveiled efforts designed to help companies draw the sting from the reporting of executive rewards.

David Phillips, senior corporate reporting partner at PwC, said: ‘Executive remuneration is one of the most heavily-scrutinised parts of the annual report. Going into the AGM season, an enormous and disproportionate debate surrounds it, fuelled largely by complexity, opacity and sometimes a touch of envy. This needn’t be the case.’

The group believed that ‘all too many’ remuneration reports provided the bare minimum required by standard setters, alienating investors. The reports also needed to give a clearer picture of how, if at all, below-par performance hit executives’ rewards.

According to the group, explanations must be provided on how the remuneration committee has spent its time during the year, how it has arrived at its decisions and most importantly, how it is continuing to refine the alignment of executives’ interests with those of shareholders.

Charles Tilley, chief executive of CIMA, added: ‘Clearly picking the KPIs and linking them appropriately to executive remuneration is very important but, when done effectively and reported clearly and transparently, [reports] should help to remove the aura of mistrust that surrounds this emotive subject.’