UK - Mercer Human Resource Consulting has unveiled a new method for evaluating executive pay which, it says, promotes greater transparency.
The approach will be used to evaluate board directors’ pay packages to enable consistent comparisons across companies.
Mercer also hopes it will highlight where performance pay reflects tough targets.
Worldwide partner Simon Patterson said: “Our aim is to produce a fair and unambiguous methodology that can be applied to publicly available information.”
Patterson said companies used a range of approaches when valuing pay and long-term incentives and setting performance conditions.
“A further complication is that most executives have several overlapping share-based awards that differ in value at any one time.
“The new method is an attempt to make sense of this confusing information released into the public domain.”
He added: “What we are looking for is to remove the interpretation of data from the equation, and create real transparency.
“We can then concentrate on the important issue – that of identifying those companies where top pay actually rewards top performance.”
Mercer developed the method in consultation with representatives from major companies, institutional shareholders and the media.
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