The man who advised London mayor “Red Ken” Livingstone’s controversial Greater London Council in the 1980s and is credited with making environmental planning a bigger issue to investors and companies has now targeted executive pay.
Last month MacDougall’s corporate governance group, Pensions and Investments Research Consultants, unveiled a remuneration rating service that he contends is the first to systematically grade British companies on top dogs, pay.
“Our main concern is that companies are paying executive directors for failure,” says MacDougall.
Unfortunately for companies, they can,t dismiss the 48-year-old MacDougall as a gadfly. His clients, mostly local government authorities and unions, control £450 billion ($639 billion) in pension assets.
Pirc will grade compensation plans from AA (best) to EE (worst), according to such criteria as whether pay packages are based on performance targets significantly above market expectations and whether performance is benchmarked to competitors, pay plans. MacDougall plans to release a league table of results this month. The idea, he says, is to “help clients determine what is best practice in each industry.”
But what’s bound to rile Britain’s senior executives most is MacDougall’s “excessiveness guideline.” To gain Pirc’s seal of approval, salaries must match industry norms, and incentive bonuses cannot exceed 150 percent of base pay.
Executives may balk at that, but in the wake of the Enron-Andersen debacle, they,ll find it harder to fault MacDougall for another of his crusades: separating auditing from consulting.
