James Moore: Not long-term and not much of an incentive
James Moore is the Independent's Associate Business Editor and writes the Outlook City comment column from Tuesday to Friday. He also has a keen interest in disability issues and when not attempting to further injure himself playing wheelchair basketball.
Thursday 14 February 2013
Outlook A long-term incentive scheme is the gift that keeps on giving if you're a corporate executive. When bosses – and they do this a lot at banks – say they've given up their bonuses for whatever reason, it's not always completely true.
At some point down the line they know there's a good chance that a complaisant remuneration committee will hand them a crate of free shares through the long-term incentive scheme.
Remuneration reports are often extraordinarily opaque on how much these are worth. The same goes for the performance conditions attached to them, if there are any.
That's how boards like it: they might be highly embarrassed if people realised just how much executives can get their hands on and just how weak their performance criteria are.
If somnolent City institutions don't understand the conditions (or can't be bothered to make the attempt) it also makes them easy to manipulate when performance doesn't measure up, so the executive team still gets paid.
Pirc said it believed that such schemes were neither long term, nor effective as incentives, so in future it would recommend that its subscribers oppose all new ones.
The usual gaggle of financial spin doctors will no doubt huff and puff and claim the Pirc is an "outrider" that isn't taken seriously by people with real clout in the City. The interesting thing is, however, that over the long term Pirc's been on the right side of most of the arguments about governance. Institutions with their clients' interests at heart also have an incentive to listen to what it says because it could result in better run businesses that provide better returns.
- 1 What marriage would look like if we actually followed the Bible
- 2 If these extraordinarily powerful images of a dead Syrian child washed up on a beach don't change Europe's attitude to refugees, what will?
- 3 The Chinese city where men have 'three girlfriends because there are so many women'
- 4 'Heartbreaking' Syria orphan photo wasn't taken in Syria and not of orphan
- 5 Orthorexia nervosa: How becoming obsessed with healthy eating can lead to malnutrition
Britain to take more refugees as Cameron bows to pressure after more than 250,000 back our campaign
Senior British politicians tell David Cameron: When dead children are being washed up on beaches – it's time to act
Jeremy Corbyn calls Osama bin Laden's killing a 'tragedy' - but was it taken out of context?
If these extraordinarily powerful images of a dead Syrian child washed up on a beach don't change Europe's attitude to refugees, what will?
If you're not already angry about the refugee crisis, here's a history lesson to remind you why you really should be
Make your voice heard: Sign The Independent's petition to welcome refugees
iJobs Money & Business
£16000 - £40000 per annum: Recruitment Genius: A Foreign Exchange Dealer is re...
£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...
£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...
£14000 - £16000 per annum: Recruitment Genius: This company was established in...