Bosses are being urged to be more open

Of 95 investors and 75 analysts quizzed, 73% said such pay deals gave business a bad name.

And 94% believe executive pay should be more clearly linked to performance.

Mori's Roger Stubbs said: "The ability of senior management to deliver results is clearly uppermost in the minds of City decision makers."

Mori warned companies that unless performance and pay are more closely linked "companies will continue to face problems".

Investor protests

The discovery follows a number of high profile shareholder revolts earlier this year.

Carlton boss Michael Green was forced to withdraw as chairman of the new ITV company, with many commentators blaming shareholder anger over the ITV Digital debacle for the move.

Back in May, HSBC survived a revolt over a �25m pay deal for its US director William Aldinger.

Carlton's Michael Green recently suffered a shareholder revolt

However, one week earlier, a lucrative 'golden parachute' deal for the chief executive of pharmaceuticals firm GlaxoSmithKline, Jean-Pierre Garnier, was voted down by its shareholders.

Mr Stubbs, head of Mori's investor relations practise, added: "Our research suggests that this influential group perceives a lack of credibility in the link between performance and pay - hence the burgeoning emphasis on demonstrable experience."

In fact, both analysts and investors view quality of management as the most important factor in judging a company - with their track record the most important factor.

However, while honesty and integrity is the second most important indicator for investors, analysts focus on senior management skills, expertise and experience.

Openness sought

Changing trends in company evaluations were also highlighted by the report.

The City audience is turning away from financial performance - just 29% of investors see it as key, while 57% of investors do; down 18% and 17% respectively on last year.

Instead, they are turning to a firm's valuation and growth potential as a means of sizing up a possible investment - neither of which featured in the top six responses in 2002.

The Mori/IRS report also warned firms to be more open in future.

Both analysts and investors rated personal meetings with company officials as the best source of information on a firm.

Mori said: "This ... reinforces once again the value of an approachable, communicative senior management."