The fact that UK companies are revisiting performance plans comes from disquiet at institutions that the plans in place are too short term and executives are being rewarded when the hurdles haven't really created value for shareholders. The so called "peer comparison hurdles" have been self-fulfilling as each peer performs to trigger the other peer's award, which then triggers the first peer's awards.
The same pressure from institutions is palpably lacking in Asia and the US which is leading to fear there will be a brain drain from UK companies.
However, the issue with performance related pay is not the principle itself but the way the criteria are set.
Institutions should be challenging remuneration committees (REMCOs) to justify criteria via the remuneration report disclosures. Where a REMCO has been lazy by not applying meaningful criteria, the reports should be voted down and the REMCOs should consider resigning.
Backlash spurs blue-chips to rethink pay plans