Britain's approach to executive pay resulting in bosses earning far more than their staff is "not fit for purpose", concluded a report published Thursday and written by company heads. The Executive Remuneration Working Group, chaired by Nigel Wilson, chief executive of insurer Legal & General, found that while London's benchmark FTSE 100 index is trading at levels similar to 18 years ago, executive pay over the same period has more than trebled.
"There is an increasing disparity between average wages and executive wages," said the working group that forms part of an organisation representing investment managers. "This misalignment has resulted in widespread scepticism and loss of public confidence," noted the Investment Association's working group.
"Failure has sometimes been rewarded, and use of median comparators has driven disproportionate rises in executive remuneration," it added.
The report comes shortly after shareholders in BP rejected a pay deal worth $19.6 million (17.4 million euros) for chief executive Bob Dudley in a symbolic vote amid heavy losses and job cuts at the oil giant.
The working group meanwhile, which includes also David Tyler, chairman of supermarket chain Sainsbury's, has called for "greater transparency" and "clearer alignment of shareholder, company and executive interests".
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