Executive pay hit by poor performance

Citation

(1999), "Executive pay hit by poor performance", Leadership & Organization Development Journal, Vol. 20 No. 6. https://doi.org/10.1108/lodj.1999.02220fab.001

Executive pay hit by poor performance

Keywords Executives, Remuneration, Performance-related pay

Executive pay increased by 6.9 per cent in the year to January 1999 - a slight dip on the previous year's 7.2 per cent, but still the second highest increase this decade.

The main constraint on executive pay growth has been a drop in the value of management bonuses, according to the 1999 National Management Salary Survey, published by the Institute of Management (IM) and Remuneration Economics. The 1999 survey marks the twenty-sixth year of tracking of management pay in the UK. The survey covered over 24,000 individuals employed by 538 organizations.

According to the survey, the average manager is 42 years old, earns £36,423 and has been in the organization for 14 years. The average director is 47 years old, earns £97,598 and has also been with the organization for 14 years. Sixty-five per cent of managers earn over £30,000 a year and 31 per cent earn over £40,000. Thirty-one per cent of directors earn over £100,000 annually, while 3 per cent earn in excess of £250,000.

Directors working in finance received the greatest pay increase at 15 per cent, followed by those in personnel (11 per cent) and management services (10 per cent). Directors in research and development fared worst with the lowest rise in earnings at just over 4 per cent.

Companies appear to be finding it harder to keep managers, with 16 per cent reporting retention problems - the highest figure since 1990. The number of managers choosing to leave their jobs rose for the fourth year running, with resignation levels at 5 per cent.

The full survey costs £540 and is available from Remuneration Economics, Survey House, 51 Portland Road, Kingston-upon-Thames, Surrey KT 2SH.