Executives Should Lose Long-Term Incentive Pay, U.K. Panel Says
- Business Committee says plans can distort leader behavior
- Urges use of stock options, vesting over more than five years
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Executives in the U.K. should no longer receive compensation based on long-term incentive plans because they conceal true levels of pay and can create perverse incentives, a panel of lawmakers said.
The plans usually involve shares instead of money and are based on different performance metrics. They can be so sophisticated that they require teams of advisers, according to a report by the cross-party House of Commons Business Committee.