In particular, it highlights:
• the myth of “super talent” as a factor that continues to drive excessive pay with one remuneration committee chair commenting: “It’s nuts… and nuts has become the benchmark”;
• how there needs to be much greater diversity among those responsible for setting CEO pay, both in terms of their ethnicity and gender, and also their professional backgrounds and expertise;
• how current pay mechanisms contribute to the problem of high pay.
As a response, the CIPD and High Pay Centre say they are “recommending replacing long-term incentive plans (LTIPs) as the default model for executive remuneration, with a less complex system based on a basic salary and a much smaller restricted share award”.
This, they believe, would “simplify the process of setting executive pay and ensure that pay is more closely aligned to executive performance”.
The CIPD and High Pay Centre are also calling for RemCos to ensure CEO pay is “aligned more appropriately to rewards across the wider workforce and that their contribution is measured on both financial and non-financial measures of performance”, including measures such as employee wellbeing and investment in workforce training and development.
