No routine riches: reforms to performance-related pay

No routine riches: reforms to performance-related pay
Document type
Corporate author(s)
High Pay Centre
High Pay Centre
Date of publication
13 May 2015
Trends: economic, social and technology trends affecting business, Management & leadership: including strategy, public sector management, operations and production
Business and management
Material type

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This report is the result of a year-long inquiry conducted by a committee of independent experts from business, academia, and the media. The report argues for the abolition of so-called ‘Long-term Incentive Plans’ (LTIPs), claiming they have driven up executive pay to unwarranted levels without delivering a corresponding increase in company performance. The report also argues that:

  • Annual bonus payments should be made in cash, not shares, to prevent executives from benefiting from sudden increases in the share price caused by external factors such as a takeover bid
  • So-called ‘golden hello’ payments to entice external executives should not be offered unless the position has been advertised as part of an open recruitment process
  • The ‘remuneration committees’ that set executive pay should be diversified, to ensure committee membership reflects a wider range of professional backgrounds.

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