From Mr Sean O’Hare.

Sir, The difficulties getting executive pay right are highlighted nicely by Alison Smith (“Blue chips wrestle with pay formula”, August 8). The article cites two contradictory pieces of research on whether there’s a link between pay and performance. And even where companies do manage to align pay with corporate performance, doubts remain on the extent to which performance is down to the executive’s role or to market conditions. This is a fair point. In my experience, complex long-term incentives, especially relative total shareholder return, tend to reward volatility rather than sustained strong performers. A better approach would be to make executives significant shareholders who are unable to sell their stock for a good number of years. This would ensure executives feel the same pain or gain as shareholders and help sort the wheat from the chaff.

Sean O’Hare,

Remuneration partner, PwC,

London EC4, UK

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