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They should seek greater transparency around the pay that directors get, make it clear where performance levels have been achieved or haven’t been achieved and what the impact on that is on directors remuneration packages.
I think they also need to be careful about exit payments, so where a director is departing, making sure that they’re not rewarding someone for failure. So I think they need to be much more open and clear about these points. I think they need to simplify directors’ remuneration packages as well.
Often there are many components to directors’ remuneration, so unless you can carefully add up all the elements it can be quite difficult to get an overall feel for just how much one individual is getting.
And I think some simplicity in structuring remuneration packages would be very beneficial.
I’m not sure there’s been a culture change because I’m not convinced that there was necessarily anything that broken.
I think with the codification of directors duties in the Companies Act 2006, all directors stopped and thought again about how to be good directors and to promote the success of their company for their benefit of the members as a whole.
I’m not as convinced as perhaps some of our national press are that short-termism is such a problem.
If you look at the way a lot of directors remuneration packages for example are structured, there are longer term incentives and share schemes that require them to actually invest some time and effort going forward in their businesses.