UK - Pension funds increasingly want companies to justify the incentive plans they award directors and executives, according to a survey from Hewitt Bacon & Woodrow.
The consultant’s corporate governance survey said that investors wanted incentives for directors to specify performance conditions, to explain why targets are set at particular levels and why they are being applied to specific executives.
The survey states: “Institutional investors are keen to see that plans have been thought through and will act as a real incentive for improved performance.
“They want to ensure that plans stimulate improved performance and are not simply designed to pay out for no added value.”
The survey also said that institutional investors preferred annual bonuses to be left up to the discretion of remuneration committees, rather than for such bonuses to be agreed as part of long-term incentive plans.
It added that all investors thought that annual bonuses should have personal as well as corporate performance targets.
*The Co-operative Insurance Society is calling upon companies to report on their social ethical and environmental performance, as well as their financial performance.
It says that 70% of a company’s performance is linked to its reputation, goodwill, brands and patents and that if it concentrates too much on financial figures it will damage its long-term success.
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