Fat-cat bonuses only in ‘exceptional’ circumstances

Influential shareholder advisory service says fat-cat bonuses should be scrapped apart from ‘exceptional’ circumstances

Fat-cat bonuses should be scrapped except in ‘exceptional’ circumstances, an influential shareholder advisory service has said. 

Pirc said it supported getting rid of annual payouts unless ‘an event has occurred worth of a bonus’. 

Call for change: Pirc said it supported getting rid of annual payouts unless ‘an event has occurred worth of a bonus’

And it claimed that long-term bonus schemes that hand executives shares – often worth millions of pounds – in exchange for hitting certain targets can still ‘pay out where there is failure’ and ‘reward the mundane’. 

The advisory firm suggested firms reduce the amount of variable pay provided to executives and increase fixed pay. 

The proposals are at odds with policies followed by many listed companies, which aim to reward executives with stock – making them shareholders and ‘aligning’ their goals with those of other investors. 

In its consultation paper, Pay For A New World, Pirc said this concept was ‘a fallacy’ because executives should see doing what is best for the company and shareholders as ‘part of the job’. 

Leave a Comment