Our Valued Citizens

Brace yourself: a study of executive bonuses has discovered that increases in "directors' compensation" are frequently linked neither to long-term strategy nor to value for the shareholders. Imagine that. It is possible, according to KPMG, who carried out the survey, that the higher bonuses mean performance is improving. Then again, they concede, it is also possible that requirements have become less stringent. Chief executives in the largest hundred companies took home an average of £2.3 million last year, of which the annual bonus accounted for more than half. Chief executives in the next two hundred and fifty largest companies took home an average of £878,000, of which the annual bonus accounted for two-thirds. Almost all City bankers expect higher bonuses this year, and a quarter of them expect more than double last year's bonus. "Too many companies are paying executives for achievements against targets with marginal relevance to the corporate strategy and the value proposition it puts to shareholders," a KCMG partner said, perhaps in order to emphasise the way in which performance may be improving. The situation is "not necessarily to every executive's liking either." This is certainly understandable. Some of the increases are "because pension shortfalls are being replaced with cash payments and incentives". Evidently the poor things are having a hard time keeping up their National Insurance contributions.