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Corporate governance key to cracking the credit crunch
5 November 2008:
Speaking at the National Association of Pension Funds’ Annual Corporate Governance Seminar, the business advisory firm said recent salary trends showed remuneration increases were lower than last year.
It advised employers to ensure pay was aligned with strategy and performance as growth slowed and profits plummeted.
Deloitte head of executive remuneration Carol Arrowsmith warned unprecedented external scrutiny on pay in the financial services industry was likely to sensitise executive compensation and result in a "culling of talent".
Arrowsmith forecast firms were unlikely to make any form of salary increases in the near future and said companies could wait for markets to settle before reviewing structure and shape of remuneration packages.
She said: "I expect there to be lower bonus payments in the near future and many existing long-term incentive plan awards are unlikely to pay out, particularly if subject to financial targets."
Arrowsmith explained that the current remuneration structures were developed in times of sustained economic growth and questioned whether the focus on variable pay had contributed to an aggressive drive for out-performance and riskier behaviours.
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Source: Professional Pensions
