Latest Video

Barclays annual meeting: Has executive pay become disproportionate to performance?

Posted: 27th April 2012

Gavin Oldham of The Share Centre comments on Barclay's remuneration policies - with almost a quarter of shareholders expected to register a protest against Barclays's remuneration policies at today's annual meeting.

---

It is understandable that there is so much concern about executive remuneration at a time of austerity following the financial crisis.

While we recognise the need to reflect market comparisons, these need to be much more closely scrutinised, particularly with respect to the performance and risk exposure of top earners.

Meanwhile, there should be far more sensitivity shown in setting both salaries and bonuses, with the multiple between highest and lowest earner (full-time equivalent basis) being disclosed in companies' annual reports.

A study by The Share Centre amongst corporate governance specialists and fund managers, recently revealed there is a clear problem with director-level remuneration in companies which often bears no relevance to the business model or the strategy of the organisation. 

It highlights a widespread belief that executive pay has become disproportionate to performance and there is a unanimous conviction that it is now too high. The substantial majority of respondents (83%) were in favour of clawback arrangements stating it would help to improve the link between salary and achievement.

There was a very strong view that companies should consider the impact on employees when setting executive pay, with 88% believing this should be done. 

This is particularly important especially when redundancies are made at the same time as record bonuses are being paid to top earners. A further 18% said they were increasingly asking companies about the relationship between executive and employee pay and requesting that they justify pay rises when rewards for the rest of their workforce were not increasing.