A letter to the Editor of the Daily Telegraph which was published on 28th June 1988.

Your strictures (editorial, June 25th) on the recent payments to Sir George Jefferson and other displaced chairmen are well merited, but I doubt that the financial institutions will provide an effective restraining factor.

Besides excessive payments for loss of office, the salaries of the directors of major corporations have leapt up at many times the rate of real profitable growth in their businesses.  This gives a whole new meaning to the phrase “unearned income”.  Indeed, British corporate managers in some sectors are fast gaining a reputation not so much for creating capital as for conferring it on one another.

To restore a reputation for the responsibility in pay matters which it is so often commending to its workforces, the CBI should produce a code of practice on directors’ pay and compensation.  By citing this in an action against a board acting irresponsibly in pay matters, private shareholders would recover some of the power they have lost to the institutions.