A survey by the Institute of Directors (IoD) has said that anger over excessive salaries is eroding public confidence in big companies.

The High Pay Centre think tank, which commissioned the survey, has said that the prevalence of ‘excessive’ salaries in UK companies is “corrosive” despite new rules in place to limit directors’ pay.

The poll of 1,000 members of the IoD found that 52% of respondents rated high executive pay packages above product mis-selling and bad PR as the biggest threat to company reputation.
Simon Walker, Director General of the Institute of Directors said: "Performance-related pay can be a key driver of success. Companies of all sizes have policies that reward individual contributions through mechanisms such as commission and bonuses. When it comes to senior executives there are higher standards, and rightly so. Pay must be sufficiently long-term to encourage them to plan five, ten or twenty years ahead.

“However, in some corners of corporate Britain pay for top executives has become so divided from performance that it cannot be justified. Runaway pay packages, golden hellos, and inflammatory bonuses are running the reputation of business into the ground. Large companies need to look closely at the role excessive pay is playing in fuelling an anti-business backlash from the public and some politicians. IoD members are justifiably concerned at the impact this is having on their own small and medium-sized companies.

“As remuneration committees begin to consider this year’s pay deals, I would urge them to take note of the shareholder backlash we saw last year. There is a responsibility on the part of directors and boards to restore the link between long-term performance, accountability, shareholder return and executive rewards. Groups like the IoD and High Pay Centre will continue to keep on the pressure until companies take note.”