Directors who fail net pounds 23m as their reward

The rewards of failure for directors of the top 250 British companies have soared in the first half of this year to pounds 22.8m, almost matching the pounds 23.2m paid in compensation for loss of office for the whole of last year.

A survey by Pirc, the shareholder consultancy firm, found the total payout over the last 30 months was pounds 65m. It said this could have been reduced if the advice of the Greenbury report, published a year ago today, had been followed.

The Greenbury report pressed for a move towards restricting directors' rolling contracts to a year or less, but it accepted there could be special reasons for longer periods.

Anne Simpson, Pirc director, said: "The danger is that the majority of companies are claiming to be the exception."

Although three-year rolling contracts have fallen from 44 per cent before the Greenbury report to 5 per cent of companies surveyed, two-year contracts have more than doubled from 24 to 53 per cent. One-year contracts have risen from 30 per cent in 1993-94 to 40 per cent.

The Pirc report also confirmed widespread criticisms of long-term incentive schemes introduced as a result of the Greenbury report, many of which have easy performance targets and pay out enormous sums if they are fully met.

Pirc found in an analysis of 31 schemes that the long-term schemes offered rewards ranging from 50 per cent of short-term bonus to 400 per cent of directors' basic remuneration. More than half failed to provide sufficient data to calculate the potential gains.

The Greenbury report said performance targets should be stretching, but 42 per cent of schemes paid out in shares for below average performance.

Few schemes disclosed their current ranking against the chosen comparator group of companies, making it impossible to assess whether the target was challenging. Some companies even paid out for earnings-per-share growth in line with economic growth.

And while Greenbury said a three-year performance period should be the minimum, this has become the maximum for more than 90 per cent of schemes. Of 103 companies in the top 350 with long-term plans, only 42 have put them to a shareholder vote, as recommended.

Ms Simpson said: "There is a danger of long-term schemes becoming overly complex and failing in their purpose."

Start your day with The Independent, sign up for daily news emails
News
news
Arts and Entertainment
British author Helen Macdonald, pictured with Costa book of the year, 'H is for Hawk'
booksPanel hail Helen Macdonald's 'brilliantly written, muscular prose' in memoir of a grief-stricken daughter who became obsessed with training a goshawk
Sport
footballLive blog: Follow the action from the Capital One Cup semi-final
Life and Style
food + drink
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Web Developer - PHP

£16500 - £16640 per annum: Recruitment Genius: This fast growing Finance compa...

Ashdown Group: Client Services Manager - Relationship Management - London

£30000 - £32000 per annum + benefits : Ashdown Group: A highly successful, int...

Recruitment Genius: Credit Controller / Customer Service

£18000 - £20000 per annum: Recruitment Genius: This rapidly expanding business...

Guru Careers: In-House / Internal Recruiter

£25 - 28k + Bonus: Guru Careers: An In-house / Internal Recruiter is needed to...

Day In a Page

Greece elections: In times like these, the EU has far more dangerous adversaries than Syriza

Greece elections

In times like these, the EU has far more dangerous adversaries than Syriza, says Patrick Cockburn
Holocaust Memorial Day: Nazi victims remembered as spectre of prejudice reappears

Holocaust Memorial Day

Nazi victims remembered as spectre of prejudice reappears over Europe
Homeless Veterans appeal: Homeless in Wales can find inspiration from Daniel’s story

Homeless Veterans appeal

Homeless in Wales can find inspiration from Daniel’s story
Front National family feud? Marine Le Pen and her relatives clash over French far-right party's response to Paris terror attacks

Front National family feud?

Marine Le Pen and her relatives clash over French far-right party's response to Paris terror attacks
Woman who was sent to three Nazi death camps describes how she escaped the gas chamber

Auschwitz liberation 70th anniversary

Woman sent to three Nazi death camps describes surviving gas chamber
DSK, Dodo the Pimp, and the Carlton Hotel

The inside track on France's trial of the year

Dominique Strauss-Kahn, Dodo the Pimp, and the Carlton Hotel:
As provocative now as they ever were

Sarah Kane season

Why her plays are as provocative now as when they were written
Murder of Japanese hostage has grim echoes of a killing in Iraq 11 years ago

Murder of Japanese hostage has grim echoes of another killing

Japanese mood was against what was seen as irresponsible trips to a vicious war zone
Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

Celebrities call on David Cameron to take more Syrian refugees

One young mother tells of torture by Assad regime
The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

The enemy within

People who hear voices in their heads are being encouraged to talk back
'In Auschwitz you got used to anything'

'In Auschwitz you got used to anything'

Survivors of the Nazi concentration camp remember its horror, 70 years on
Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

Autumn/winter menswear 2015

The uniforms that make up modern life come to the fore
'I'm gay, and plan to fight military homophobia'

'I'm gay, and plan to fight military homophobia'

Army general planning to come out
Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

What the six wise men told Tony Blair

Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

25 years of The Independent on Sunday

The stories, the writers and the changes over the last quarter of a century