PROs urged to push for ‘fairer’ CEO pay

PR Week UK, Friday, 26 November 2004, 12:00am,

The Daily Telegraph City editor Neil Collins has called on financial PROs to tell their clients to rein in rampant executive pay and adopt a reward system for CEOs more closely linked to stock-market performance.

Speaking at the IPR Corporate and Financial Group’s annual dinner at the Royal Commonwealth Club last week, Collins criticised what he called the ‘iniquitous’ arrangements through which CEOs receive generous pay and severance deals while rank-and-file workers suffer pay cuts.

Collins said he sympathised with trade union calls for restraint on executive pay and suggested it was time for shareholders to press non-executive boards to adopt a performance-related pay scheme for CEOs through the use of a derivatives transaction.

By this method, CEOs would invest a large sum of their pay or bonuses into the stock derivative, effectively betting their bonus on the performance of their company.