Executives don’t understand bonus packages

Executive compensation schemes do not encourage senior managers to perform
better, because directors do not understand how the criteria relate to their
performance.

PricewaterhouseCoopers executive compensation partner Tom Gosling told the
Financial Times that even the most commonly-used schemes were
unsuccessful in aligning pay with performance over a sustained period.

While cash bonuses make up 23% of remuneration, a figure that is rising,
shares and options account for 36% of executive earnings.

In the past year, only four FTSE 100 CEOs did not receive a cash bonus amidst
all others whose annual compensation, including bonuses, ranged from ?1.75m to
?4m.

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