RAPID RESPONSES

Pay may be earned

Albert Ellis made some good points about executive pay [The debate over chief executives’ pay isn’t simple, yesterday]. The debate seems to have reached a stage where too many look for data to support their prejudice about overcompensated fat cats and don’t investigate any further the quality of the studies involved. Research this month from two academics at the LSE, Brian Bell and John Van Reenen, also found that the picture wasn’t as simple as some want it to be. Their study covered 90 per cent of the UK stock market’s market capitalisation and found the performance of firms may explain between one-quarter and one-half of the rise in the gap between chief executive pay and the pay of workers. Falls in performance are also followed, although less aggressively, by chief executive pay cuts and firings.

Mary Willmott Freeman