In a report on what it called the "crucial missing link", PricewaterhouseCoopers said few companies can explain any connection between executive rewards, performance and shareholder interests.
Of the top 500 FTSE companies, the typical bonus was 50 per cent of salary - but no clear performance criteria were set. At best, remuneration committees looked only at financial performance.
PricewaterhouseCoopers said far too few companies had bothered to adopt performance-based remuneration for executives. Boards were also failing to develop criteria of performance appropriate to the business they ran.
Moira Conoley, the author of the report, said: "We found little evidence of individual or corporate performance in any company, at any level, being optimised. If reward was really linked to performance we would expect to see rewards as diverse as the companies that set them, but we don't."
Fund managers, in control of half of all the shares in quoted companies, remain uninterested in directors' remuneration, the report adds. Although institutional shareholders could force companies to link pay and performance, they were showing no leadership on the issue.
The Government is proposing to "name and shame" utility companies that fail to make clear the relationship, if any, between boardroom pay and standards of customer service in their annual reports.
Meanwhile, a survey of managerial pay showed that the remuneration of senior directors is rising much faster than that of junior managers.
Reward, the pay consultant, said that pay increases for top managers were averaging 10.9 per cent but junior managers were only averaging 6.9 per cent. Overall, managerial pay rose by 3.4 per cent. Managers in the North-west got the biggest rises, averaging 3.74 per cent, while the lowest settlements were in Northern Ireland.
The report, which surveyed 1000 organisations across the UK, found companies forecasting bigger pay rises for managers in the coming year.
But settlements for rank and file employees are set to shrink. Downward pressure on pay will limit rises to 2 to 5 per cent, according to Incomes Data Services.