The overall level of Chief Executive's remuneration packages has risen out of all proportion.
In 1965, the average CEO was paid 24 times more than the average worker in his firm. By 2007 the figure was 275 times.
Unfortunately the levels of pay and bonuses are not results driven. It has been shown that bonuses can actually have a negative effect on performance.
The more you pay someone does not equate to the harder work for you.
In 1936 the Harvard Business Review published a report called "Executive compensation compared to earnings". This showed that despite all firms doing badly over the period 1928 to 1933, those CEO’s that were paid less did better than those that were paid more. The conclusion being that companies that pay higher salaries get less satisfactory results.
Head-hunters must accept blame for the unjustifiable rise in CEO pay over recent years.
These firms receive fees as much as 30% of the first year’s total remuneration package and push for short-term bonuses rather than those linked to long-term performance. Shareholders, particularly institutions such as pension funds, should start to object at the AGM's to rein back the salaries and ensure that CEO pay and bonuses are results driven and focused on the longer term.