This month we publish a unique survey showing how well our top companies are doing for shareholders. It makes fascinating reading. For example, £1,000 in Jarvis, the facilities management company, would have grown to £33,600 over the past three years. The same in De La Rue would have shrunk to £330.
It is the third year we have run the Management Today/William Mercer league table, and we have added an important dimension, turning the spotlight on to the people at the helm of our leading companies - the so-called Fat Cats. We have done this because debate still rages over how much they should be paid. Members of the Government have said recently we should not have hang-ups about people making themselves rich in the marketplace.
No one should have a problem with directors being rewarded for outstanding results. But how do you best link pay and performance?
Four years ago, Sir Richard Greenbury, the generously paid Marks & Spencer chairman, assembled a committee to consider this deceptively simple question.
It reported back that one of the best ways to reward performance is through long-term incentives plans, or Ltips, which, it said, would help align the interests of directors with those of the investors - such as the people running our pension funds.
The anniversary of the Greenbury Committee report on executive pay seemed an appropriate time to assess its success. The theory was that star performers would be rewarded generously, while below-average performers would not get quite so rich. So, was there a correlation between fat cats and fat profits? The research by William Mercer, the compensation firm, shows that the widespread introduction of Ltips has done very little to align the interests of investors and managers.
At EMI, one of the poorest FTSE 100 performers over the past three years, Sir Colin Southgate made paper gains of more than £900,000 on his Ltips.
Kevin Lomax of Mysis delivered a total shareholder return of nearly 500% over the three years, without making anything from Ltips. But individuals should not always take the credit or the blame. As Anthony Hilton points out, business success contains luck as well as judgment. Rising or falling share prices do not always identify a director as a star or a flop.
Directors of public companies will remain in the firing line unless incentive schemes are refined and involve the possibility of a downside. Unlike lawyers, venture capitalists or pop stars, their duties to shareholders expose them to relentless scrutiny by politicians and the media. They must face up to them and make sure that only extraordinary chief executives receive extraordinary rewards.