Underperforming directors in the firing line

Results from this week’s Accountancy Age/Reed Accountancy Personnel Big Question show 51.5% of finance directors think lottery-sized bonuses should be refused when directors don?t deliver the goods, even when one is written into their contract.

The findings follow fears that troubled engineering giant Marconi will have to pay a £1m bonus to departing chief executive Lord Simpson. Robert Dearing, FD of Twickenham Plating Group, said guaranteed bonuses removed the ‘incentive to perform’.

‘I am not opposed to paying people well for doing a good job, but it shouldn’t be guaranteed in the contract.’

One anonymous FD added: ‘If the contract has been drawn up correctly it should state that they should have to perform to a certain level to get the bonus. Otherwise sack the lawyer.’

Though a majority agreed bonuses should be witheld, 39.5% felt companies should not default on contractual agreements. One said: ‘It would set a bad precedent if they were to rescind.’

Trade secretary Patricia Hewitt has already warned directors that ‘there should be no reward for failure’ and hinted at government intervention on the issue.


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