Monday 2 April 2012 10:04 pm

Report: Directors setting each others’ pay harms businesses

BUSINESSES welcomed calls for more diversity in large firms’ remuneration committees yesterday, supporting claims that executive pay is too often decided by cliques of former bosses. The High Pay Centre think-tank’s report showed 46 per cent of pay committee members are current or former lead executives. Directors on the committees may find it hard to argue their colleagues’ pay needs to be cut, it warned. “Diversity in the make-up of remuneration committees is extremely important,” agreed the Institute of Directors. “These committees need to be made up of people from business who understand how firms work, but that should include a far wider range of people than the default of signing up retired chief executives.”