CSR factors largely ignored in salary sumsMarch 2008
Fewer than ten per cent of the UK’s biggest companies use non-financial measures to determine senior executives’ performance pay, new research has found.
A study by the Local Authority Pension Fund Forum shows that only seven of the FTSE 100 build non-financial assessments into their long-term incentive plans. None of the companies use more than one non-financial performance measure when setting remuneration, excepting United Utilities, whose Share Matching Plan takes account of environmental performance, customer service and employee satisfaction and engagement.
The forum, whose 46 pension fund members have combined assets of £85billion ($165bn), says executive incentive schemes that assess performance against financial targets only ‘do not adequately focus executive directors’ minds on the non-financial factors that influence a company’s long-term prospects’.
The forum did find, however, that half of the FTSE 100 operates annual bonus schemes that apply non-financial performance measures alongside more traditional financial targets.
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