Attempts to halt the growing greed of top executives will get nowhere, says Robert Heller, until reward is linked to a range of key targets - mostly non-financial - and objectives which are long-term.
The utility fat-cats who pocketed vast salary rises and rich stock options should be deeply unpopular with their peers. Pay packets for other chief executives will suffer in consequence - the backlash is already biting deep.
The Greenbury committee, New Labour and boards themselves are moving to slow the accelerating gravy train. Monks Partnership, which previously listed boardroom inhabitants whose take exceeded £500,000, called a halt when numbers exceeded 70. Its last listing was confined to the salary millionaires - 16 of them, and rising fast.
That excludes share options, what's more. But for the scandals, rapid escalation towards the American nirvana would have continued. Over 1990-94, 25 top-paid Americans amassed $1.5 billion, an average remuneration of $12 million a year. They also owned $1.9 billion of stock - with more on the way.
The US even tried legislation to halt the great greed, setting a ceiling of $1 million, above which salaries could not be off-set against corporation tax. The result? Several CEOs on lower salaries swiftly arranged to rise to seven figures. Those already pocketing more loot simply let the shareholders foot the tax bill.
Anyway, performance-related pay was exempted. So Walt Disney's Michael Eisner ($8 million last year), General Electric's Jack Welch and ITT's Rand Araskog ($4 million apiece) could rest comfortably on their mounting piles of cash. Nor was this necessarily fair reward for fine effort. The relationship between take-home lucre and corporate performance is totally random.
Worse still, according to Business Week, 'boards are setting easier hurdles for payouts and increasing the pool of money that's available for bonuses'. No doubt, loopholes will be exploited as eagerly in Britain. The current agitation - left, right and centre - will merely moderate the upward trend, even though peer pressure is reinforcing the political onslaughts.
Boots and others, in abandoning stock options in advance of Greenbury, show the way the wind is blowing. And peers are vital: for they, in the shape of non-executive directors, hold the keys to the cash-box. But they will still find it hard to apply meaningful criteria, for none exist - even for Sir Richard Greenbury's own £903,900 package as Marks & Spencer's chairman.
And why should the institutional investors, as critics of their 'block vote' propose, exert their influence on this issue above all others? The idea that these titular owners should act as if they were the real proprietors, anyway, raises profound and dangerous questions. Fund managers and trustees are qualified (you hope) to pick investments but management is hardly their bag.
The limits of intervention have surely been set by the California Public Employers' Retirement System. Calpers spotlights poor performers among its 1,200 holdings, and applies the pertinacious pressure for management change that dethroned John Akers at IBM. It's highly selective, though. The laggards' list comprises only 50 companies, of which 35 get the full treatment. British institutions could usefully adopt a similar stance - solely to protect their investments.
But does excessive executive reward have any links with inferior investment performance? One danger is highlighted by Forbes magazine: 'Big corporations have been showering more and more goodies on their boards of directors. Is it any wonder some of these boards have dithered in the face of obvious mismanagement'. On an annual basis, directors' fees may look modest: but hourly rates can handsomely exceed a top lawyer's £300 - with perks on top.
The same non-executives who, for whatever reason, shower gold upon top executives may be similarly indulgent to malfeasance on what really matters - strategy (or non-strategy), management style and plain common sense. Over-pay is often associated with long-serving CEOs who are high on dominance, but short on performance, who too readily believe that 'what's good for me is good for General Motors'.
That's a potentially deadly combination, which won't be cured by anything stemming from Greenbury. And there's a deeper issue still: the impact of boardroom excess on other employees. In the US, says pay gadfly Graef Crystal, the critics think they've won 'the war against greed'. Yet it's 'still pay-the-moon.' The average chief executive of a major US corporation made a wholly indefensible 149 times the average factory worker's pay in 1993.
Cedric Brown, whose British Gas benefits launched the current backlash, comes about half-way between that and the multiple of 25 often cited as the ceiling for sustaining good morale - and thus good management. Morale is vital to the real issue, which is how to achieve and sustain optimum long-term performance.
That won't flow readily from top-heavy rewards linked haphazardly to short-term financial performance factors over which the rewarded boss has little control. Link reward to a basket of key targets, mostly non-financial and tied to long-term objectives, and bosses will be able to prove their real worth. If they can't, any salary is too high.