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Page last updated at 08:08 GMT, Friday, 28 October 2011 09:08 UK

'A closed little club' sets executive pay

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Shareholders of public companies should become "more militant" about executive pay, which has seen large increases in recent years, according to a top corporate head-hunter.

John Purcell of Purcell & Co was responding to a report by the research group Income Data Services, that found the directors of the top 100 businesses listed on the London Stock Exchange saw their pay rise by an average of 49%.

He added that if shareholders do not push for more transparency about linking performance to pay, the government may have to intervene - something he believes is "always a disaster".

However, Deborah Hargreaves, chair of the High Pay Commission, said that performance related pay only has a "marginal effect" insisting that it is "hard to justify" the heads of companies getting pay rises when companies are seeing profits and workers' wages plummet.

Executives pay is set by a "closed little club" which needs to be "broken", she said.


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