Directors get the pay without putting in the performance, says survey

Research conducted by PricewaterhouseCoopers reveals up to 70% of company directors take share option pay-outs despite the fact their businesses may be underperforming the market.

PwC concluded the results of its research, a survey of 122 companies listed on the lower half of the FTSE 550 index, implies businesses are failing to make a clear link between pay and performance.

Graham Ward-Thompson, partner in PwC Global HR Solutions, and author of the report, said: ‘If the link between directors’ remuneration and performance is to be effective, a greater level of clarity is needed to ensure that shareholders understand ther criteria on which directors are being judged effective.

‘For example, our report shows that in 49% of schemes a shareholder would not be able to identify what criteria were being used. In addition in 32% of annual bonus arrangements the performance requirement for pay-out was either not disclosed or described in terms too specific to be able to draw meaningful conclusions as to the targets set.’

PwC’s survey follows a year after a government report on boardroom pay which called for clear links to be established between pay and performance.Failure to make the links may provide ammunition to those claiming directors get paid too much. Budget preview

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