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Britain's biggest companies are urged to link bonuses to safety and green success
6 February 2008:
Britain's biggest companies are being urged to radically alter the way they pay their directors by linking their bonuses to non-financial measures such as environmental protection and the safety of employees.
The Local Authority Pension Fund Forum, which represents public sector pension funds with £85bn of assets, has already urged its members to oppose pay policies at oil companies BP and Shell because they do not include any references to the safety of employees.
The forum is beginning a campaign to encourage all FTSE 100 companies to include targets such as employee relations and environmental protection in the performance measurement for directors' bonuses.
It found only seven FTSE 100 companies had non-financial measures included in their long-term incentive plans to reward directors. Only one company, United Utilities, has a plan that includes more than one non-financial factor.
In the wider FTSE 1000 there were 66 companies that set out so-called key performance indicators to measure non-financial performance.
The forum argues: "Executive incentive schemes that only measure performance against financial targets do not adequately focus executive directors' minds on the non-financial factors that influence a company's long-term prospects."
Source: The Guardian
