This week I deliver the article I’ve been writing on Executive Pay and its implications for the UK to Vince Cable MP at the department of Business Innovation and Skills and to George Osborne MP at the Treasury.
I was invited to write this paper because of the work and research I’ve done over many years on corporate governance, stakeholders, shareholders and best business practise.
My paper looks at the mechanisms by which executives, particularly bank executives, have been paid exorbitant amounts, many rewarded even when profits and share prices have decreased and where taxpayers have bailed-out failing banks. The paper then looks at how this situation can be rectified and the manner to which it should be done.
The government has so far suggested four key areas it wants to address to stop excessive executive pay: transparency of what the executives are paid (these figures have so far been far too difficult to decipher), greater diversity of the board, empowering shareholders allowing them veto excessive pay, encouraging employee engagement.
Whilst I agree with all of these, I have also provided a further solution, should those already offered not provide the results required. My suggestion provides for an industry panel offering industry remuneration scales, that is because at present there is a constant drive for ever increasing payments, with an entire industry based around executive remuneration pushing it in an upward and unsustainable direction. This panel would offer moderation and transparency into executive pay and link staff and the public to such decisions, a very much needed addition to executive remuneration.