Wednesday 13 January 2010

Do massive executive pay deals and bonuses improve company performance?

That's the standard justification.

The answer is… er, no. Company directors now earn around 250-350 times more than their employees. Meanwhile, the bonuses for some banks (the season's starting this week) are now equivalent to the billions poured in by taxpayers to keep said banks open.

Since 2000, stock market valuation by the FTSE 100 has declined 25% while relevant executive pay has risen 85%, and bonuses by 350%. 

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