Why executive salaries have risen since 1980

From Mr Nick Stevens

Sir: Hamish McRae is too polite to our industries' bosses when trying to explain in "Pay and the Pavarotti factor" (13 July) how they have come to pay themselves so much. There is no evidence that the forces of international competition are compelling British companies to raise pay to US levels for their senior executives. If this were the case, one would expect to see overall pay levels in the UK and the US converging and that has not happened.

The Pavarotti factor might explain why an individual executive was paid more than his peers. But all executive pay has been rising faster than any measure of company performance could justify. There is some evidence that most boards make a policy of paying themselves above average rates. If this is the case, this alone would explain why average executive pay has been spiralling. We used to have to worry about the inflationary impact of spiralling wages. There will surely be trouble if society finds it has to support proliferating Pavarottis.

Yours faithfully,

Nick Stevens

Hon Secretary

UK Shareholders Association

Chilworth, Surrey

13 July