Unclear link between CEO bonuses and company performance

Annual
bonuses paid to chief executives are often poorly linked to company
performance, according to a new study.

The
Economic and Social Research Council commissioned study found that two-thirds
of the UK’s top 350 companies last year failed to specify in the annual report
the full performance conditions attached to the bonus.

The
study concluded there was "no clear relation" between the size of
bonus and total shareholder return – a well-regarded indicator of company
performance.

The
research cited the case of Sir Peter Davis, former chairman of supermarket group
Sainsbury’s, who was awarded a bonus of around £2.4m for attaining unpublished
targets.

By Mike Berry

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