When is an incentive not an incentive?

Tony Scouller

In the light of current accountancy scandals, suggests that high levels of incentive above base salary for senior executives (so that as much as 75% of total remuneration may be at risk from a poor performance and/or unpredictable market conditions) are indeed damaging, because they place the executives under a perhaps irresistible temptation to exaggerate results for personal benefit.

When is an incentive not an incentive?

Tony ScoullerRPM Ltd

Sed quis custodiet ipsos custodes?

Juvenal said it nearly 2000 years ago: 'But who is to guard the guards themselves?' Recent accusations of irregularities at major public companies, both in the United Kingdom and more spectacularly in the USA, bring this phrase to mind.

Alarmingly, it is claimed these irregularities were conducted either under the noses, or with the connivance, of the directors both executive and nonexecutive of the companies involved. Worse still, the auditors allegedly knew what was happening and either failed to do anything or...

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