Watchdog group to crackdown on executive pay amid public outrage at bumper bonuses for fat cats 

A crackdown on executive pay is under way amid public outrage at bumper bonuses.

Bonuses will be more difficult to cash in and companies will be urged to consider the reputational damage of awarding huge sums under guidelines from the City watchdog.

The Financial Reporting Council is today publishing a new code of governance which includes measures designed ‘to address public concern over remuneration’.

The move follows an outcry earlier this year over the bonus package awarded to Persimmon boss Jeff Fairburn which at one stage was worth £131million.

The code says bosses should have to wait at least five years before being able to sell shares paid as bonuses to make sure they get rewarded only if firms succeed in the long term.

It adds that bosses should be stopped from getting giant pay-outs on the back of pay formulas if the outcome does not match their performance. Companies will also have to take into greater account the salaries of the rest of the workforce when setting pay for those at the top.

The new code adds: ‘Remuneration arrangements should ensure reputational and other risks from excessive rewards … are identified and mitigated.’

David Styles, director of corporate governance at the FRC, said: ‘There have been examples over the past two or three years and … that’s why we have done the comprehensive review.’

FRC chairman Sir Win Bischoff said: ‘The new code considers economic and social issues and will help guide the long-term success of UK business.’

Alex Brummer – Page 64