Leading Scots fund manager claims opaque industry is still rewarding failure

Reacting to the latest PwC survey of FTSE 100 Executive Pay, Mr McLean said the UK’s big companies and their shareholders have done little to address “lengthy remuneration reports, often fudging what actually has been paid and whether targets have been hit”.

He took issue with the PwC survey which has reported a “significant raising of the bar in executive pay”, and that “on the whole the right balance has been struck”.

But Mr McLean says it is “remarkable” that only 14 of PwC’s sample of 39 company reports in 2015 make full disclosure of bonus benchmarks.

“Too many do not disclose numbers to evidence the pay-outs … others rely on a single target indicator. Some highprofile FTSE problem companies such as Tesco and Glencore have shown just how well-paid strategic failure can be.”

Mr McLean says one problem may be the make-up of boards, because “many non-executive directors come themselves from a culture of high pay”.

He goes on: “The CEO bonus culture contrasts with lower pay grades; many mid-managers and other employees are expected to perform primarily for base pay, and progress in that … Some incentive arrangements appear so complex that the consultants and executives involved must have diverted a great deal of time and effort in design and negotiation.”

Mr McLean says bonuses need a radical overhaul. “Measures are simply plucked out of the air with little hard evidence that they work over the longer term. Companies still hide behind their consultants and claims of commercial confidentiality.”