Less than a quarter (24%) of FTSE 100 organisations disclose the level of performance required to generate an ‘on-target’ bonus but not the full range of performance targets they offer, according to research by PricewaterhouseCoopers (PWC).
Its report, Sunlight is the best disinfectant, which analyses FTSE 100 organisations’ executive bonus pay-outs versus employees’ performance over the last five years, also found that 36% made full disclosure of the connection between employees’ performances and the bonuses they received.
It also revealed that 12% made some indication of where performance had been against employees’ bonus targets, and the remaining 28% made limited disclosure of the connection between performance and bonuses, or opted out on the basis of commercial sensitivity.
Fiona Camenzuli, pay, performance and risk partner at PWC, said: “Pay has become more strongly linked to performance since [organisations] have been required to provide fuller disclosure. The link between pay and performance is twice as high in the FTSE 100 companies that provide full target disclosure than in those that don’t.
“Disclosure is often accused of fueling increases in executive pay, but in this case greater disclosure is leading to a better link between pay and performance.”