Instead of aligning the interests of bosses and shareholders, "performance-related" pay frequently promotes opportunism and tunnel-vision.Such findings are not new.
"The big bonuses have spread to thousands of people around the globe and particularly with the poor shareholder performance, that is what is so puzzling about it".
Prudential, Britain's largest life insurer and, but for its Egg online bank, the epitome of dullness, trounced those same banks in an index of global financial firms' shareholder performance published by Oliver, Wyman, a consultancy.
The company confessed to the error last month when it told the stock market that it had erroneously stated that performance criteria linked to total shareholder return, a measure of shareholder performance, were linked to awards of shares intended to compensate the chief executive for €775,000 forfeited when he left PPR.
Having return on equity (a measure of shareholder performance) that is greater than the cost of equity (the cost of doing business) and also have core tier one capital ratio (a measure of financial strength) of 10.5%, up from 9.3% now.
Corporate governance, now more than ever, turns on shareholder and on shareholder performance.
But the truth is that controlled companies are built for corporate comfort, not shareholder performance.
The company said that while it "recognized that total shareholder return performance was delivered in a difficult business environment, it also felt that more closely aligning the experience of shareholders and executives was important".
We need to revive the debate about all the wrongs committed in the name of delivering value to shareholders, and performance-based compensation is the tip of that particular iceberg.
In the report, chairman of the company's remuneration committee, Lord Davies of Abersoch said: "The company has delivered exceptionally strong three-year total shareholder return performance relative to its peer group for the performance period that ended on 30 June 2013".
Standard Chartered has just warned shareholders that its performance in the last six months have not met expectations.
