RAPID RESPONSES
The pay agenda
I would like to respond to your coverage of our research into directors’ pay. Our findings are based on meticulous research and a rigorous methodology. There is nothing meaningless about averages if that is what the data is saying, I know of no statistics textbook that actually says otherwise. Our average 49 per cent not only includes some high individual increases, but also some very sharp decreases. Medians are equally statistically valid, but understate the highs and lows.
As to our latest non-executive directors survey, when we talk about the 10 per cent rise we were only looking at the two-thirds of top companies that reviewed their fees during the period for a perfectly good reason. Non-executive fees are usually uprated every two or three years: to capture what increases have taken place we need to isolate companies where reviews have taken place. To ensure the 10 percent figure was not taken out of context we included in our latest release the calculation including companies where reviews hadn’t taken place. That was how you were able to report a 4 per cent rise in non-executive fees.
A debate on directors’ pay is to be encouraged, but only if participants are interested in pursuing a discussion on the basis of facts rather than a personal agenda.
Steve Tatton, editor, IDS Executive Compensation Review