One again Executive Pay is big news with the latest outcry over substantial bonuses for FTSE 100 bosses. As we previously referenced in The Economist there is a need to consider carefully the issue of Executive pay and reward. The situation highlighted there was the apparent lack of linkage between the bonus due to the CEO of Volkswagen and the corporate scandal of the rigging of Emissions Testing.
Holding the top Executive’s accountable for corporate culture and establishing the correct tone from the top ought to be at the top of every Board’s agenda. As we have also previously reported The Financial Reporting Council’s (FRC’s) “Culture Coalition” study highlighted the relationship between corporate culture and long-term business success in the UK.
Sir Winfried Bischoff, Chairman of the FRC, said:
“A healthy corporate culture leads to long-term success by both protecting and generating value in the UK economy. It is therefore important to have a consistent and constant focus on culture, rather than wait for a crisis. A strong culture will endure in times of stress and change.
Key findings of the FRC’s study:
- Recognise the value of culture
- Demonstrate Leadership
- Be Open and Accountable
- Embed and Integrate
- Assess, Measure and Engage
- Align Values and Incentives
- Exercise Stewardship
Perhaps if the Executives pay is clearly linked to the above then we can move the debate forward from one which simply looks at the numbers to one about driving forward organisational culture, delivering long term value to shareholders, and building ethical businesses.
If you would like to learn more about how organisational culture, whistleblowing and Senior Management Accountability should link in to your overall fraud strategy then our guide and resource centre contains a raft of information and tools to assist you.
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