The current focus on executive pay is timely and we welcome the spirit of the government’s views that executive remuneration must be squarely linked to performance.
We campaign for all businesses to act responsibly and a central part of this is demonstrating leadership on corporate governance and values – so it is important that responsible businesses demonstrate leadership on the issue of remuneration.
We recognise that this is a complex issue and there is a greater need for transparency and simplicity, both in how companies report on salary and packages and how remuneration committees measure and evidence the performance upon which they make their decisions.
Furthermore, government focus on this issue provides an opportunity for all businesses committed to responsible behaviour to engage in a meaningful debate about what a successful business is, how we define this and what behaviours and practices are rewarded.
Responsible, sustainable businesses are those which look beyond short-term shareholder return to consider the long term impact of their businesses, while creating economic and societal value. Such behaviour is better based on principles than simple regulation.
Now is the time to create a clearer link between responsible behaviour and remuneration – rewarding responsible leaders not just for business success and financial return, but for the positive impact of their business practices on the communities in which we operate, and for integrating responsible practices to create successful, profitable, sustainable business.
Businesses will be key in driving this agenda and they now have an opportunity to boldly align executive pay with responsible behaviour over the long term by making responsible business principles and profitability the core determiners of remuneration.
We look forward to working with our members and government as the proposals are defined over the coming weeks.
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