NO MATTER how much pressure is piled on corporate Britain to moderate some of the more excessive payments and pay-offs awarded to top executives, they continue to roll in. The annual shareholders' meeting season that is drawing to a close has seen many managers receive sums of more than pounds 1m. In a few cases, this looks like reward for failure rather than success.
Sir Bryan Nicholson, newly elected president of the Confederation of British Industry, called on the City - the most extravagant sector - to curb payments for wheeler-dealers at a time when it was vital to keep down inflation.
Kenneth Clarke, the Chancellor, briefly entered the debate earlier in the year when he criticised boardroom executives who awarded themselves 'excessive' salary rises, amid fears that exaggerated pay awards could damage the Government's low-inflation strategy.
But the seeds have already been sown for outrageous pay-offs. Last week it emerged that Jim Maxmin, who left Laura Ashley, maker of posh frocks to the middle classes, had got about pounds 1.2m severance pay, even though he officially resigned rather than being sacked.
That has come just over a year after another American, David Dworkin, suddenly quit as chief executive of Storehouse, the BhS, Mothercare and Blazer retailing group. To the humiliation of the rest of the board, he picked up pounds 3.2m for just six months at the company as he swanned off to another highly paid job back home in the United States.
In both cases, the managements of troubled companies were induced to agree to ludicrously generous contracts to attract men who were portrayed as potential saviours. No one can complain if the saviour has feet of clay. But to pay for the discovery is doubly galling for the shareholders, in whose name these deals are being done.
But the advocates of restraint can console themselves with the occasional victory. Last Thursday, Maurice Saatchi, chairman of the Saatchi & Saatchi advertising group, told shareholders that he had exchanged his five-year rolling pounds 625,000-a-year contract for a three-year contract at a more manageable pounds 200,000 a year. On top, he may receive an annual performance bonus and stock options based on long-term performance.
Mr Saatchi's five-year contract was a hangover from the 1980s. It was signed then, and its withdrawal is a direct result of the Cadbury report on corporate governance.
One key issue tackled by the report is executive pay. It recommends that directors' total emoluments - salary, stock options, pension, housing allowance, and so on - should be clearly disclosed in the annual report.
Separate figures should be given for salary and performance-based rewards, and the basis on which performance is measured should be revealed.
The report also says that executive directors' remuneration should be subject to the recommendations of a remuneration committee, made up wholly or mainly of non-executive directors. And it said that five-year rolling contracts should be replaced by ones lasting no more than three years.
None of this is compulsory, of course. But if any of these recommendations are ignored, the London Stock Exchange requires the non-compliance to be revealed in the annual report. The idea is that the shareholders can rectify what they know about. If companies fail to reveal this, the Stock Exchange can cancel their listing. However, this nuclear warhead will be used only in the most extreme circumstances.
The Cadbury report was published in December 1992 and came into force in June 1993. Compliance with its recommendations is not universal, and in some instances companies are failing to disclose their non-compliance. The Cadbury Committee is to publish a survey of how many companies are complying with each point at the end of the year.
The meteoric rise in bosses' pay started in the booming Britain of the 1980s. Mr Saatchi's case is a classic example of a pay contract set in days when companies were buoyant and profits prodigious but which continued after the recession arrived.
Indeed, the continuation of bumper pay packages into the recession and low-growth 1990s is one of the trends that has caused most offence. Not only have they seemed grotesquely out of proportion, they have also shown that the admirable profits growth of some companies in the 1980s may have had little or nothing to do with the efforts and abilities of their managers but merely reflected the economic climate.
One of the first big payments to attract notice was George Davies's late 1980s salary of more than pounds 500,000 at Next, the clothing shops chain where he was chairman. He was ousted in 1988 in a theatrical boardroom coup at 11pm in the offices of the company's solicitors.
High salaries are an import from the United States. The standard justification is that you have to pay competitive salaries to attract the best international managers. But that can become a game of corporate ego-poker in which the sky's the limit.
According to US press reports, Roberto Goizueta, the chairman of Coca-Cola, got a salary and bonus last year which - when combined with previously granted restricted shares and options he still held - totalled dollars 300m (pounds 200m).
John Akers, the former chairman of IBM, who led the company during its first-ever operating loss, recording more than dollars 15bn in charges, and losing dollars 28bn in shareholder value, was given a retirement package that included a dollars 3m severance cheque, an annual pension of dollars 1.2m, about dollars 1m in options and a bonus of about dollars 100,000.
Britain has not yet come anywhere near such excess - rightly so, considering that it is a much smaller economy than the US and the European Single Market is still a dream.
When Mr Maxmin was originally recruited to Laura Ashley, the non-executive directors were advised by Towers Perrin, the international management consultants and actuaries. Towers drew up a framework of comparable jobs at companies with businesses of a comparable size. It concluded that a comparable job would demand a salary of dollars 820,000-dollars 920,000 a year. The figures were high, because Laura Ashley generates a lot of sales in the US. In the event, Mr Maxmin's basic salary was a relatively meagre pounds 400,000 plus, of course, the small print that allowed him to trigger his pounds 1.2m pay-off at his own discretion.
Mr Maxmin's pay-off is an example of how all the extras combine to boost a total package. About pounds 800,000 of it was two years' salary, and the other pounds 400,000 was five years' pension contributions. He was also in a performance bonus scheme, but Laura Ashley did not sell enough frocks and frills to trigger this.
Another component that has boosted executive pay packets is a housing or relocation allowance for executives who have to move from overseas. Georges Chazot, Eurotunnel's new chief executive, is being paid a one-off lump sum of pounds 11,000 and a further pounds 800 a week to cover the cost of moving from Paris to London and keeping a house here. Perhaps more extreme, National Westminster has chosen to pay Richard Goeltz, group chief financial officer and another American import, pounds 242,170 to cover the cost of moving from New York to London.
At BET, the slowly recovering business services group, the remuneration committee put the pay of the chief executive, John Clark, up from pounds 708,000 a year to pounds 924,000.
George Duncan, a non-executive director of BET, said: 'I find it difficult to say how one justifies these astronomical payments. They are the result of a scarcity factor of people who can run these really big businesses.
'I think there are special situations like turnaround situations. It does require special skills and a great amount of effort in many cases.
'But it is my experience that remuneration committees do behave responsibly and try to avoid these excessive payments where the reward is not justified, but it is very difficult to allow for all circumstances.'
It is easy to be envious of these riches, but what is really wrong with them? After all, they are small change compared with the sales and profits of many of the companies these people work for.
One large institutional investor, who did not want to be named, said: 'I think there is probably greatest anxiety when there is reward for failure. If executives are in jobs and through circumstances that are not of their making the company performs badly, it does not seem wrong that they should get it.
'It is when there has been mismanagement it does not seem right that they should be rewarded. It is then that it becomes emotive. It is fair enough that some additional remuneration is available when companies do well. The question is how much? This is why companies look to remuneration committees.
'What is important is that there is disclosure. Disclosure introduces some form of accountability.'
He said extremely high remuneration was sometimes justified. An example would be Peter Wood, founder of Direct Line, he added, who has built up Royal Bank of Scotland's highly successful motor and home insurance subsidiary, and last year received a one-off cash and shares payment likely to be worth pounds 50m.
'When you have an executive director of an established company that is rather different. They are not entrepreneurs, generally they are managers,' Mr Duncan added.
Another point he made was that it is generally beneficial for managers to have share options to give them an interest in the company's long-term prospects. But options need not be so large that they erode the value of existing shares
Richard Regan, head of investment affairs at the Association of British Insurers, said that in some cases very high annual payments or performance-related bonuses could be destabilising. 'You have a very good year with a very substantial cash bonus and then you will have a not-so-good year. You have people who have 65 or 75 per cent of their earnings disappear. You have people who are working twice as hard but for significantly less reward.'
The ABI is responsible for the latest serious attempt to ensure that inappropriate pay awards are curbed. Late last month, it published a set of guidelines, Long-Term Remuneration for Senior Executives. It urges that executive directors' contracts should prevent them from receiving payment if they are dismissed for poor performance.
The ABI suggests that executives should have to wait at least three to five years before being allowed to exercise share options, and that a proportion of cash bonuses should be used to buy shares.
But the guidelines also endorse the principle that executive directors of companies with global operations should be paid packages that are competitive on the global stage.
In the US, the Council of Institutional Investors, which represents 90 large pension funds with more than dollars 800bn under management, is fighting a losing battle against excessive pay deals. Sarah Teslik, executive director, argued that huge pay awards for top executives are actually bad for corporate productivity.
'They have a tremendous negative impact on other employees' morale, on their interest in conserving and enhancing corporate assets, on their long- term loyalty to the company,' she said. 'It doesn't take soldiers long to figure out whether their leaders value their lives like their own; it doesn't take employees long either.'
She also contended that extreme wealth reduces commitment to the long-term success of the company because the executive is independently wealthy. Furthermore the fruits of success - such as country estates - take time to manage and are a distraction.
Dr Ernest Mario, ousted in March 1993 as chief executive of Glaxo, left with payments estimated at more than pounds 3m.
Bob Horton, sacked as BP boss in 1992, walked away with pounds 1.5m.
Jim Maxmin, who left Laura Ashley after a dispute, was paid pounds 1.2m for loss of office.
David Dworkin, former chief executive of Storehouse, the retailing group, was paid a total of pounds 3.2m for just six months at the company. He quit to take up another job in the United States.
John Clark, chief executive of BET, the support services group, got a rise from pounds 708,000 to pounds 924,000 last year. Shareholders learnt in last week's annual report that this comprised pounds 480,000 of salary, pounds 281,000 of incentive bonus, and pounds 163,000 pension contributions.
George Davies, founder chairman of Next, was paid a salary of more than pounds 500,000 a year in the late 1980s at the zenith of his career. His was one of the first huge pay awards.
Goldman Sachs, the investment bank, recently handed out bonuses of pounds 670,000 each to about 100 of its top staff.
BZW, the investment banking arm of Barclays, rewarded staff with bonuses totalling about pounds 100m.
Sir Geoffrey Mulcahy, executive chairman of Kingfisher, the Woolworths to Comet store group, got a pounds 450,000 pay increase to more than pounds 1.3m in the year to end January 1994. It was made up of pounds 622,00 basic salary, pounds 323,000 annual bonus, pounds 105,000 from the long-term incentive scheme, and pounds 264,000 of pension contributions.
Alan Jackson, chief executive of BTR, had his salary increased last year from pounds 464,000 to pounds 515,000.
Richard Oster, chief executive of Cookson Group, the ceramics to plastics company, got paid pounds 1.1m in 1993.
We inadvertently wrote last week that David Dworkin, former chief executive of Storehouse, was paid a total of pounds 3.2m for just six months at the company. In fact, he was chief executive for six months. He joined Storehouse in 1989.