High executive pay ‘is biggest threat to trust in business world’

A survey of 1,000 members of the Institute of Directors (IoD), carried out on behalf of the High Pay Centre think tank, found that 52 per cent identified anger over senior levels of executive pay as the biggest threat, just ahead of product mis-selling or unsympathetic portrayals of business in the media. The High Pay Centre said it believed the survey findings will increase pressure on political parties to include further measures to contain top pay in their general election manifestos. The coalition has given shareholders the power to veto proposed executive pay packages, but the issue has remained controversial, fuelled by details of bankers’ bonuses last week. The survey also found that 54 per cent of IoD members thought that building a successful company was the most important motivation for a business executive, compared with just 13 per cent who said they were motivated by financial reward.

Simon Walker, director general of the IoD, said: “Performance-related pay can be a key driver of success. Companies of all sizes have policies that reward individual contributions through mechanisms such as commission and bonuses. When it comes to senior executives there are higher standards, and rightly so. Pay must be sufficiently long-term to encourage them to plan five, 10 or 20 years ahead. However, in some corners of corporate Britain pay for top executives has become so divided from performance that it cannot be justified. Runaway pay packages, golden hellos and inflammatory bonuses are running the reputation of business into the ground.”