No Routine Riches - Reforms to Performance-related Pay

High Pay Centre Commitee
The High Pay Centre, 13th May 2015

This report is the culmination of a year-long inquiry by the High Pay Centre into the system of performance-related pay for executives.

We have looked at the growing complexity of awards that has pushed directors’ pay into the stratosphere, and found there is little discernible link with corporate success. In fact, there is an argument that it is actually damaging the economy.

We’ve tried to define exceptional executive performance, but found disagreements on what it constitutes as well as a confused system for measuring it.

When a system is not working, there are two solutions: Reform the system or scrap it. There have been attempts to reform performance-related pay over the past 20 years, but they have not worked.

We need to recognise the flaws in the system and stop paying CEOs on metrics that encourage gaming.

We believe the system is no longer tenable and needs major reform. We have suggested ways of doing this.

I would like to thank the members of the committee overseeing this project who have generously given their time, expertise and advice. Simon Walker, Roger Barker from the Institute of Directors, Dr Ruth Bender from Cranfield university, John Plender from the Financial Times, David Pitt-Watson from London Business School, Andrew Smithers from Smithers & Co and Duncan Brown formerly with Aon Hewitt.
I would also like to thank Lord Sainsbury for funding our work. This report draws on a number of other publications produced as part of this project.

For previous reports see:

Please click on the link below to read the full report.
Reforms to performance-related pay