I have seen very little comments about the executive pay packages at Petrotrin. Not that I begrudge them their remuneration, but I would like to know how their packages were determined, especially in a time when the company’s revenue was in decline, when activist investors in BP, Shell and other oil majors were actively trying to restrict the huge executive pay packages. I have included below, a study done by the CIPD of the UK.
‘Executive pay at crisis point, warns Chartered Institute of Personnel
and Development (CIPD)’
The upward momentum of chief executive remuneration in the UK’s largest organisations has reached a crisis point, according to a CIPD survey of employee views. High levels of executive pay and reward do not clearly correlate to personal performance or business outcomes and “this is having a significant impact on the motivation levels of the wider workforce,” the report argues.
Data, from a YouGov survey commissioned by the CIPD, of exploring employees’ views on executive pay, found:
• Over 70 per cent of employees surveyed believe CEO pay in the UK is “too” or “far too” high;
• Almost 60 per cent report that high levels of top pay demotivate them at work;
• More than half claim high top pay is bad for an organisation’s reputation;
• 45 per cent believe that the pay of the chief executive in their own organisation is too high;
• A further 30 per cent say they do not know what their chief executive receives in remuneration;
• Only a third agree that the chief executive in their organisation is rewarded in line with the organisation’s performance.
Charles Cotton, CIPD reward adviser, commented: “The growing disparity between pay at the higher and lower ends of the pay scale for today’s workforce is leading to a real sense of unfairness which is impacting on employees’ motivation at work. The message from employees to CEOs is clear: ‘the more you take, the less we’ll give’...It’s crucial that chief executive reward packages are simpler and more clearly aligned to both financial and non-financial performance measures.”
They also suggest that variable reward for senior people is overly complex and disproportionately focused on financial measures rather than being linked to other outcomes of interest to shareholders.
I would like to know just how is executive pay at Petrotrin determined.
Keegan Denny
La Romaine