Executive Pay: Too Much Emphasis On Shareholder Value

Ann Francke, CEO of the Chartered Management Institute (CMI), reacting to High Pay Centre & CIPD executive pay findings:

It is the responsibility of an organisation’s board to look at the impact of their actions on stakeholders - customers, suppliers, employees - not just shareholders. Executives need to be benchmarked and remunerated against how they deliver for all of these elements. Too much emphasis is placed on shareholder value, and in my view shares do not reflect the actual performance of the company. We need to find mechanisms to ensure that employees are engaged and valued - justifying executive pay gaps is key to this.

CMI’s latest Manager’s Voice survey, conducted between 24th October and 5th December 2019, found that:

• 77% of managers believe corporate pay reporting will hold big business to account for the salaries they pay
• 59% believe corporate pay reporting will give employees greater confidence in the remuneration process
• 53% believe corporate pay reporting will lead to fairer pay in the workplace generally

Ann Francke, CEO at CMI, said:

CMI knows that, whilst greater transparency can create positive change, it must go hand-in-hand with strong, skilled leadership in order to maintain a confident, fair workforce.