Prove bumper pay is earned, CBI chief tells UK business

John Cridland, the CBI's director-general, has called on big British businesses to prove that executive pay packets are deserved, on the eve of the body's annual conference tomorrow.

Mr Cridland told The Independent on Sunday this weekend: "One, we need business to show greater transparency – the public need to see [pay] figures that they understand. Two, companies need to demonstrate that rewards are for stellar performance, not for just doing the day job."

The CBI is finalising its submission to the Department for Business's executive remuneration discussion paper, which is open for comment until Friday. Vince Cable, the Business Secretary, wants the paper to come up with ways for directors' pay to be linked more closely with company performance, such as simplifying bonus structures and allowing employees to sit on remuneration committees.

Executive pay will be a hot topic at the CBI's conference, which is to be addressed by the President of Turkey. Mr Cridland said that Abdullah Gul's appearance was to highlight the importance of emerging markets after British firms had, in recent times, shown "far too much focus on the home market".

Expanding into new markets is vital as confidence among senior business leaders continues to deteriorate. Ipsos MORI research for the CBI released today shows that 70 per cent of senior business figures in the FTSE 350 think that the economic outlook has worsened since August. This is a result of the escalating eurozone problems and growing fears that a second banking crisis could be on its way in 2012. British business leaders were found to want the Government to come up with a credible growth strategy and investment in infrastructure, issues that are likely to be addressed in Chancellor George Osborne's autumn statement later this month.

The stuttering economy has also refocused public anger on executive pay. Figures drawn up by Income Data Services last month showed that FTSE 100 directors saw their total earnings increase by 49 per cent last year.

Mr Cridland insisted that the figure was distorted by a few vast increases. But he conceded: "It's about payment for results. I don't think the public minds about [Manchester United striker] Wayne Rooney's pay if he is scoring goals, you only hear people mention his salary when he isn't scoring."

The CBI chief said that there is "a big debate" about the correct way of measuring how pay can reflect performance, which could be justified by a firm's improved earnings per share, pre-tax profit or stock-market valuation. However, he added that any measure would "depend on the particular circumstances of the company".

Mr Cridland will be hosting his first annual conference since succeeding Sir Richard Lambert in February. He is expected to put considerable emphasis on the need for the UK to produce a credible exports strategy to dig itself out of its economic quagmire.