Some of the UK’s biggest companies are sounding out shareholders about pay rises for their bosses in a move that risks reigniting the controversy over excessive executive pay.The trait of hyperbolic discounting - discounting rewards that are in the future, and discount them more the further away they are - is well-known. So when corporate governance 'reformers' demanded that execs have to wait longer for their loot it was pretty obvious that the knock-on effect would be a demand in response for more reward overall.
The potential increases to salaries would further inflate overall boardroom remuneration as annual bonuses and long-term incentive plans are all hinged on basic pay.
The increases appear to be driven by changes in the way company directors receive their bonuses. Shareholders have insisted bonuses be paid out over longer periods.
Another example showing why performance-related pay for executives is a fundamentally crap idea.