Rewards For Failure outlines alternative strategies to link directors' pay more closely to performance, including reducing notice periods to about six months and giving company boards the right to veto the pay packages of failing directors.

Shareholder groups, trade unions and business lobby groups will be consulted on the strategy document which may lead to concrete proposals later in the year.

Do you think these proposals could work? Should vast pay packages be regulated so that only successful executives benefit? Is it a British trait to resent such success?

This debate is now closed. Read a selection of your comments below.

The following comments reflect the balance of views we have received:

These privileged few would have us believe that they perform miracles R. Callister, Brighton, UK

It would be very interesting to place a layman in such a position to see how a company would perform. These privileged few would have us believe that they perform miracles, but I'm betting that most people would make the same decisions. Like most positions of power, the actual work is done by everyone else, these blokes just reap the rewards for having what can only be described as a basic business strategy - usually minimising costs by making redundancies, or hair brained expansion plans. Now you know why so many fail, and why they have a 'safety net' installed prior to taking their position - they know it relies on luck rather than judgement.
R. Callister, Brighton, UK

"Is it a British trait to resent such success?" Perhaps, but it is absolutely a British trait to allow the state to interfere in someone else's business. Companies are owned by shareholders, and it is from their pockets and not mine that both successful and unsuccessful directors are paid. Shareholders take the risks and if they want to recoup their monies let them do it on their own. Let the state focus on matters in which we all have an investment.
Michael Lakey, Newcastle, UK

This is something that has to be corrected Steven, UK

Even with success, I still think big pay is an issue. There is too much of a gap between rich and poor. This is something that has to be corrected as it has a knock on effect on peoples' behaviour towards one another.
Steven, UK

I'm reminded of a sketch by Johns Bird and Fortune regarding fat cat pay - 'Success should be rewarded, failure should be compensated'. Those who say the British have a problem with success are reasonably close to the mark, however we're not talking about success are we? We're talking about grotesque sums of cash for people who've driven their companies into the ground!
Neil, UK

The idea of so called "brilliant brains" that control the country's largest consortiums getting "Fat Cat" payoffs if it all goes wrong makes no sense. If they were so good at their jobs of making millions for their respective company shareholders, surely they would not need clauses in the contract, enabling them to bale out with a parachute of millions. If anything they should pay back the money lost to the shareholders as it was their money they were using to invest. I speak as a shareholder of large companies that have lost billions, and of millions who have lost thousands.
Phil Shane, England

Lawyers are probably already working on how to circumvent any laws that may be introduced TG Howard, UK

It will be a pointless exercise, as company lawyers are probably already working on how to circumvent any laws that may be introduced. It may or may not be a British trait to resent success, but the question here is about rewards for failure, not success. Directors are just like councillors and MPs. As soon as they are in the post they concentrate on sorting out their remuneration package before making a start on the job they are there for.
TG Howard, UK

So is Patricia Hewitt going to get rid of other payments for failure? What about MPs who get a pension from the day they get voted out of office? If that isn't a payment for failure I don't know what is.
Andy Davies, UK

I do not object to success, and the rewards that go with it but what we are looking at here are directors that fail but then leave with a huge cheque! How many other people get rewarded for failure? This kind of greed is unacceptable and does not set a good example to the workforce, or the customer or even the public at large and it should be legislated against. The CBI suggests some kind of self regulation, no doubt that would work about as well as all the other self regulation which we have in the UK ie, not at all.
Gareth Hansen-Chambers, UK

Why pay anyone a vast sum in the event of their failure John B, UK

I am puzzled why a company would agree to pay anyone a vast sum in the event of their total failure. If someone takes the helm of a failing firm and turns it around I say they should be free to reap and enjoy the rewards. While I agree with the principle of limiting payoffs to failing directors, I really can't see government intervention achieving anything other than making a bad situation even worse.
John B, UK

I see no problem with performance related pay, but how can you measure that in the case of the CEO? You can certainly measure this in the case of a salesman, who is directly accountable but not so for the CEO, so how can you justify much of what they earn...
N Ross, UK

Let's have bigger rewards for success, but NO rewards for failure.
Lawrence, UK

Shareholders are unlikely to do anything about this problem because the majority of votes are wielded by fund managers who are themselves grossly overpaid. It is also nonsense to talk about a free job market. When top executives pay ridiculous remuneration they are indirectly increasing their own market value. We need maximum ratios between lowest and highest paid in an organisation and also pressure to recruit from within organisations rather than from an artificially inflated international market.
Charles Moore, Scotland

No failure should be rewarded and not only is it a British trait to resent exceptional success but does anyone look into the influence of the impenetrable network of Freemasons in such lucrative business transactions?
Helen, UK

Any constraints by the government will hinder businesses ability to compete in that marketplace Phillip Holley, London

I applaud the changes that allow shareholders visibility of directors pay, but cannot condone any direct meddlesome legislation from the government. The recruitment of directors is a global marketplace and any constraints placed by the government will hinder UK businesses ability to compete in that marketplace. Remember if a loss is minimised or headcount reduced to sustain the business then they've done a good job and need to be rewarded as such despite a public perception of the company's failings.
Phillip Holley, London

It's not a British trait to resent success so long as the success is earned, rather than inherited or stumbled upon.
Tim, UK

Tim, UK: I'm afraid what you said is simply untrue, though I wish it weren't. The British resent success and wish to normalize everyone to some deranged version of equality. As for inheritance - the adoration of the Royal Family and the aristocracy is positively idolised in this misguided country. These top managers generally make brilliant decisions that drive the companies and the economy that means the rest of the country has jobs and can feed their families.
Richard, UK

Making money isn't the problem! CEOs and owners breaking the law and getting away with it, is. People are getting tired of the lack of effort in legal action against the guilty parties... Enron and Worldcom (for example) weren't the only companies stealing, they just got caught.
Isaac, LA/US

We are not all equal. We all take different decisions and have different strengths and weaknesses. That's why some are more successful than others. And in this sphere of business, I will always defend someone who turns around a company or who builds it up and their right to pocket millions. Good luck to them! They deserve it.
Angie, UK

So what if it's the US payment norm? This is not the US Owen LLewellyn, England

Well, on Monday I'll not be going to work, as a baker, and when the bakery burns to the ground I'll pop around to my boss's house and pick up my guaranteed bonus and severance pay - or rather a punch in the face. These guys are pampered drama queens. So what if it's the US payment norm? This is not the US. Do we need the expertise of the likes of Enron and Worldcom? Let's ban the ludicrous notion of 'guaranteed bonuses': Surely an oxymoron.
Owen LLewellyn, England

To Owen: Well, it is the "drama queens" who run the companies which provide the gas or electricity that powers your ovens, makes the flour you use, ensures water is delivered and provide the transport that gets you to work in the morning and back home after your shift... it is thanks to all these "drama queens" that you have a job. I toast business success and all who aspire to it.
Tom Franklin, UK

People seem to forget that when one joins a company you agree on a salary and benefits. That is all that these executives have done. It is the fault of the particular company that these "so-called" highflyers amass fortunes whether companies prosper or fail? Why blame the individual?
David London, England

I refuse to believe the 'market forces' argument. On the contrary, it is a rigged market, perpetuated by those who have a vested interest. Senior management skills are simply not rare enough to justify these exorbitant benefit levels. Why not test this theory by advertising in the FT and publishing the results? What we are seeing is shameless greed, from people who lecture their employees in the ideals of duty, service and loyalty.
Gerry, UK

I don't think it is fair that these fatcats get these huge pay deals. I work for a large financial company. I have the great job of trying to justify this. I must admit if I was offered a 33% pay rise I would take it. It is a case for everyone for themselves. But when I only get 1% raise that equates to just �152 I tend to be bitter. Shareholders and account holders should start expressing themselves more openly and let it be known we won't take it any longer!!
Lesley, Herts, UK

Of course directors' remuneration should be cut drastically for failure. However while MPs vote themselves ever increasing salary and pension increases for ever less attendance, where is the good example to follow?
John Ross, Spain

It is a British trait to be angry at inequity which we see happening more and more Juliet, Cornwall, UK

No, I don't believe it is a British trait to resent "success" but we are not talking of success and it is a British trait to be angry at inequity which we see happening more and more. People who are doing their very best in difficult and inadequate places of work and paid the very minimum because the jobs are few and far between, pensions at just above poverty level for people that have worked their socks off all their working life but only managed to pay off mortgages, with nothing to spare for savings although they were promised that if they worked hard and paid their way they would be taken care of. It is all balderdash I'm afraid. The ones with the most, want the most, whether or not they deserve it.
Juliet, Cornwall, UK

When did people start believing that the money made by a company is anything to do with its employees? Companies are designed to give the maximum amount of money possible to the owners and bosses. Employees are merely there to make money for the bosses. People are just jealous and small-minded, capitalism is what it is, and the �20 million payments will only get bigger in time.
Jon Del Mar, UK

Any executive should be paid a normal base-salary as anybody else. His eventual bonus, however, which is "retroactive", should be "fat" if he has delivered what he promised (the budget). If he has not delivered, sorry not even a "slim" bonus should be paid that year!
Ole Olesen, Denmark

The real scandal is the enormous levels of pay given to those people who don't produce anything - namely the fund managers who make up the majority of shareholders. They're the fat cats who should be in all our sights, not the company execs.
Henry, UK

It is not about success or failure in the company's business. It is more to do with the individual's success on selling themselves to their bosses/shareholders. It is OK saying that you disagree with golden parachutes, but who wouldn't want one? It is a case of every man for himself and take it while you can get it. Admittedly, it isn't fair, but few things in life are. Good luck to them all, is what I say and errr... any chance of a loan?
Derek, USA/UK

It's high time that failure at the board level was castigated rather than rewarded Jon Blacklock, UK

I am a shareholder in the major company that I work for and feel very strongly that success can and should be rewarded but am vehemently against reward for failure which seems to be becoming endemic in world commerce. We routinely see golden parachutes resembling lottery wins which reward failure for CEOs, chairmen and execs whilst their employees pay the price of their failure with investments that are worthless or even losing their livelihood. It's high time that failure at the board level was castigated rather than rewarded. Use your vote if you're a shareholder and make your views plain to insurance companies etc who invest in the stock market because at the end of the day it's our money.
Jon Blacklock, UK

Since when was 'this is the way they do it in America' a good reason for doing it in the UK? If these executives want to play by American rules, then let them go and compete for jobs in the US. Paying anyone huge amounts of money for failure is ridiculous, especially when that failure usually includes a lot of non-influential people losing their jobs, with very little financial recompense.
Fiona, Scotland

How much is enough for these people? What if this chap accepted 'only' �10m and left the other �10m to be distributed throughout the firm to reward good workers with decent rises?
Hugh, England

If the shareholders won't tackle these abuses it is up to the customers. If they can afford these ludicrous pay levels they are charging customers too much and the customers should vote with their feet and move their accounts elsewhere.
Nick Matthews, UK

�20m would pay the wages of the 100 people at the company I work for almost seven years. Does one man really deserve this?
Anonymous, Glasgow

Richard Branson is popularly celebrated by the nation Steve, UK

I think we, as a nation, have a very strong sense of fair play. Richard Branson is an example of entrepreneurial success being popularly celebrated by the nation. What we resent is that these golden parachutes are so disproportionately large compared to the pittance that most people can expect when they're the victims of "rightsizing", "rationalising" or just plain surplus to requirements.
Steve, UK

In most companies, executive pay is set by a committee of non-executive directors, who are frequently executive directors of other firms. There is therefore a circular arrangement by which directors of different companies agree each other's huge pay packages, although at an individual company level the process appears to be independent.
James, UK

I don't resent reward for success, but I do resent massive rewards for the top and little for the bottom. I also resent massive rewards that are "contractual" that bear no resemblance to performance.
Jamie, UK

There is a definite British trait to resent success. Instead of accepting the fact that someone else has done very well for themselves, the gut reaction is one of spite. We hear calls for super-tax brackets, capped earnings and the like from people who simply can't be bothered to do the work, take the responsibility and take the personal financial risks it usually takes to become a so-called 'fat cat'. Regulation of pay packages is the business of the shareholders and nobody else. One thing puzzles me though - why is it acceptable for a footballer to be paid millions a year, but not the head of a big company?
George, UK

Nobody seems to mind if David Beckham gets loads of money Harold, UK

Nobody seems to mind if David Beckham gets loads of money. It's just typical Brit double standards.
Harold, UK

At least David Beckham does his job well.
Andrew Hill, England

I think it's fair for him to get a payout after selling his company. I don't think it's fair for directors to get paid just for leaving, and not at all for failure. I don't think the British resent well-earned success. I never heard the Beatles being slagged off for doing well. It's the people who get rich on the back of others and who don't really deserve it that tend to get slagged off, and rightly so.
Phil, UK

No they shouldn't be regulated. If he's good at his job and he's worth the money, then that's great. If he's not good at his job, then the shareholders should vote against the deal, the public should boycott the bank, and the employees should leave.
Paul Weaver, Exeter, UK

How does a "golden parachute" inspire a director to be successful if they will get the bonus anyway?
Richard, Wales

My team made almost �1m for the Royal & Sun Alliance in the last two years. Now the team is being disbanded and some of us are being made redundant. Bob Mendelsohn gets �2.7m after a spiral of deteriorating fortunes for five years. Answers on a postcard, please...
Anon, UK

The fact that an executive of a publicly owned company, who only takes risks with other people's wealth, should be paid this much is obscene. Saying that they can only motivate themselves to do well if paid these amounts shows that the only thing they truly care about is themselves, not their employees, shareholders or customers. If these executives want to make this sort of money, let them risk their own wealth by setting up a private company.
Jason Kilby, GB

The 'top talent' argument was a fallacy created by 'top talent' Spencer, UK

A study a few years ago conclusively showed that the recruiting "top talent" argument used for justifying such pay awards was a fallacy created by "top talent". There are plenty of people who could do a similar or better job for less money. Surely that benefits shareholders? It's just jobs for the boys.
Spencer, UK

It's not a British trait to resent success. It is a British trait to have enormous gaps between the highest paid worker and the lowest within an organisation. This is about fairness not envy.
Bob Stevens, UK

The shareholders can regulate this deal, as they did with Glaxo. This guy negotiated a good deal for himself, and so well done him. Are people upset because he is doing well or because they are not?
Ben Patient, UK

I agree with the fatcat salaries for people who are the head of international companies with a huge income. However, the payment for leaving the company is outrageous. There should be a payment only if the person is terminated when they were having a positive impact on the company. If the company is failing or the person decides to leave, there should not be a huge payoff.
Nick, UK