LONDON, Dec 28 (APM) - Chief executives of healthcare companies in the UK are the highest paid among the country's 350 biggest companies, but the link between what bosses of all industries are paid and a company's financial performance is "negligible", according to research.
The median pay for chief executives at the UK's 350 largest companies was 1.9 million pounds (2.2 million euros) in 2014 - a rise of 82% in 11 years - the study by Lancaster University Management School found. However, performance as measured by return on capital invested was less than 1% during that period.
The report's authors said the findings suggested a "material disconnect". The study, commissioned by the investment association CFA UK, said the increase in executive remuneration was largely driven by performance-based pay.
It also said the metrics typically used to gauge company performance, such as total shareholder return and earnings per share growth, were too short term.
The research suggested the need for "a more refined discussion about the type of performance measures employed" rather than remuneration levels and performance-related pay arrangements alone.
Will Goodhart, head of CFA UK, said: "Too few of today's popular approaches ... genuinely align senior executives' pay with the economic value that they create."
Chief executives of companies in the healthcare sector were the best paid, on an average of 2.9 million pounds, with those in the "basic materials" and oil and gas sectors on 2.2 million pounds and telecommunications at 2.1 million pounds.
Bosses in the lowest-paid sectors included technology on 1.3 million pounds and industrials (1.1 million pounds), which the authors said were "hardly trivial amounts but significantly lower nonetheless".
The study comes after government outlined its plans to make companies justify high levels of executive pay in November.
Among the measures under consideration are pay ratios, which would show the gap in earnings between the chief executive and an average employee. Shareholders would be handed more powers to vote against bosses' pay, but the government will not force companies to put workers on boards.
Prime minister Theresa May has made tackling corporate excess a priority.
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