From Mr Geoffrey Maddrell.

Sir, Throughout the months of debate on the mammoth pay awards to top executives, the missing element has been the onus of responsibility inherent in effective executive leadership. With power comes responsibility – responsibility to act in the interests of the company as a whole. The top executives set the tone for the company, which is a reflection of their leadership. There was the day, admittedly at a time of much lower differentials between those at the highest level of reward and the average, when chief executives would set the tone by not taking an increase in reward when the rest of the organisation was having to forgo such an increase. This mark of leadership built respect and motivated the whole organisation, like military leaders who ensured that the soldiers tents were up before their own.

Focusing the debate on regulation and restriction encourages corporate leadership to fight their corners. Responsible corporate governance cannot be built on regulation alone and must be accompanied by the promotion of a climate of more responsible leadership. This change in climate also goes to the heart of the debate on capitalism. The virtues of temperance and decency were seen by Adam Smith at the outset of capitalism as requisites for the successful operation of the market economy.

Geoffrey Maddrell, Chairman, Human Recognition Systems, Liverpool, UK

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