Claims by top corporate executives that huge salary increases are justified by the scarcity of their talent have been dismissed by a powerful lobby of international fund managers.

A report by the International Corporate Governance Network (ICGN) suggests there is no real international market for these executives and so boosting pay packets for this reason may not be justified.

The ICGN is proposing a code of conduct for future executive remuneration, but baulks at any sort of statutory control.

The ICGN has significant clout, as its institutional investor members control $10 trillion of assets worldwide.

Formed in 1995 its backers include fund giants such as Calpers, Hermes Pensions Management and Barclays Global Investors.

Rewarding success

Ross Goobey, head of the ICGN committee looking at executive pay, said that a statutory body was not the answer, rather that shareholders should determine appropriate levels of remuneration.

The key to this, he said, was the availability of information to shareholders and their willingness to act. They were traditionally reluctant to do so, he said, but believed this was now beginning to change.

Mr Goobey said international comparisons of pay packets, particularly with the United States, had caused salaries and benefits to rise with the exception of Japan, where executives were underpaid.

A lack of checks and balances on these pay increases beyond the boardroom in the United States had been a problem until now, but post-Enron a new consensus that this issue must be tackled had emerged, he said.

However Mr Goobey emphasised that success had to be properly rewarded.

"We must get away from the idea that all these very high payments are completely unjustifiable," he said.

But at the moment we were in a situation where everyone was rewarded regardless of their level of success, he added.

The report is expected to be approved at the ICGN's annual summit in Madrid next month.