Dated: 28 October 2011
Commenting on the report released today by Income Data Services (IDS), which suggested that pay packages for the top executives of FTSE 100 companies has risen 49 per cent in the last year, Simon Walker, Director General of the Institute of Directors, said:
“The IoD will not seek to justify pay increases of nearly 50 per cent for FTSE executives. We want to make it very clear that this is not the picture across the rest of the private sector. In 2010 an IoD/Croner survey found that the average pay increase for directors of smaller, unlisted companies, was 2 per cent – 37 per cent of executive directors of these companies actually had a pay freeze. We should not confuse a small number of high-earners with the overwhelming majority of business leaders who are working hard to make their businesses successful, and create jobs, in very challenging times.
”It is crucial that pay is linked to performance. An important aspect of this is that shareholders should keep a close watch on management pay, and challenge where they do not think that executives merit their remuneration. In addition, we think it would be beneficial for boards to seek to appoint independent non-executive members with a wide range of professional experience, to provide critical eyes on levels of executive pay.”
He added:
“Government action is not the answer. Trying to regulate, rather than getting shareholders and investors to demand action could create market distortions and damage the UK’s competitiveness.”
