Executive pay hits the headlines

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In the last month, executives have been at the centre of a media storm. In a period of budget cuts and financial crisis, executive pay has been under intense scrutiny. Stephen Hester, the RBS chief executive, and Sly Bailey of Trinity Mirror, are only the latest in a long line of executives who have had to explain or even reject their bonuses.

According to an ICM survey, few people now believe that top bosses should be paid more than £1m a year. The poll of 2,000 adults also found two-thirds wanted wider representation from staff on remuneration committees.

What can change management tell us about this regular business dilemma?

Firstly, no one should be surprised to find that it is an issue.  Plato was the first to propose executive salary caps, when he said that a community’s highest wage should not exceed five times its lowest. That was ancient Greece.

Secondly, a good plan and prep is required. How is remuneration calculated? Who is involved in the decision making process? Of course these questions need to be answered by taking into consideration different stakeholder needs and expectations.

Executive pay isn’t something that happens irregularly, it shouldn’t catch people by surprise. It should be trailed and communicated with context through a solid long term plan.



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