The UK Shareholders Association issued this demand, in the wake of what it called ‘recent corporate debacles involving the large-scale destruction of company value, usually due to mergers and acquisitions’.
UKSA chairman David Blundell said incentives should reward ‘exceptional performance’, but all too often they rewarded ‘exceptional deception as the latter is the easier route’.
The group drew attention to the much-debated issue of auditor independence and said the auditing of accounts must be done ‘in conditions where moral hazard is not present, as far as possible’.
Otherwise, the UKSA warned, ‘unjustified rewards can be presented as being based on the achievement of reasonable targets’.
In addition, the review should look at remedying boardroom schemes, which enrich directors via options, or rewards poorly linked to performance.
The UKSA said investor rights should be the top priority, and called on the government to look into the ‘vast disparity’ between rewards for boards and for lower tiers of management.
Last week, DTI secretary Patricia Hewitt said the Treasury, the Financial Services Authority and the Accountancy Foundation would be pulled together to form a special group to address the role of auditors in the UK as well as look at the renumeration of non-executive directors.
Does Darwin's theory apply to taxation? Colin ponders...
The EC has been instructed to draft a European Union (EU) directive authorising an EU financial transaction tax, which would apply to ten of the EU’s 28 member states
Accountancy watchdog the FRC has dropped its investigation into the former chief financial officer of Tesco, nearly two years after the supermarket was engulfed in an accounting scandal
Colin imagines how Apple's logo might change in the wake of the EC's ruling over its Irish tax arrangements