Unmerited executive pay 'no longer acceptable in current climate'

Top executives in both the public and private sectors are under more pressure than ever to justify their compensation packages as investors seek a move towards performance-related pay, it has been claimed.

According to new research carried out by the Financial Times, executives sitting on the boards of oil and natural gas companies in Europe and the United States enjoyed some of the biggest bonuses last year.

This is in spite of the fact that they were also found to be among the biggest culprits in terms of failing to deliver good levels of investor value.

And, while the bonuses and high salaries have now been paid, experts have pointed out that such a situation is unlikely to be tolerated in the future, with any new executive appointments to be made with the acknowledgement that attractive remuneration deals need to be fully earned.

"Especially during economic downturns … there is a heavy burden on company boards to explain why their chief executive is an exception," Hye-Won Choi, head of corporate governance at the US pension fund TIAA-CREFF, told the newspaper.

"The often-used argument for paying large compensation packages to retain executives doesn't hold water in this job market."

Just recently, Citigroup revealed that its chief executive would continue to collect a salary of just $1 a year, in light of the bank's recent bailout by the US government.