Terry Murden: Every little helps to make boardroom pay acceptable

MAYBE the earth didn't move, but in executive pay terms it feels like some kind of seismic activity may be taking place.

The change announced by Tesco to its remuneration policy is a long overdue shift by one of the biggest British firms and others should take note.

Company boards have stubbornly refused to yield to growing shareholder pressure for pay restraint in the face of fierce criticism that they are out of step with ordinary working people and trading performance at a time of austerity.

Protests at annual meetings have become almost routine in recent weeks, with the boards of William Hill, Ladbrokes, Standard Life, Lloyds Banking Group and HSBC among those to suffer a backlash.

Tesco, clearly fearful of adding to that list, is scrapping share options and cutting base salaries as an acknowledgement of opposition to pay rewards handed out in ever-increasing sums, often without regard to the underlying performance of the company concerned or its shares. New boss Philip Clarke will get a lower basic salary than his predecessor Sir Terry Leahy.

Reaction, though, has been muted as Tesco's revised scheme doesn't exactly cut the size of the swag bag being handed out to its top executives. They are just being rewarded in a different way.

However, every little helps, as the firm keeps ungrammatically reminding us and the new package will tie pay to performance as well as being simpler to understand and implement.

The announcement, just ahead of Tesco's annual general meeting, is a deliberate attempt to head off a repeat of the rebellion last year when 47 per cent of shareholders either voted against or abstained on executive pay.

But shareholders have got the bit between their teeth on this issue and it is notable that Pirc, one of the more active corporate governance lobbies, has yet to fully respond. It may be premature to suggest this indicates some reservations about the Tesco plan, but there has not exactly been an overwhelming cheer from the corporate governance and shareholder groups.

Some may see these changes as little more than a cynical ploy to make excessive rewards appear more palatable. But excess pay is excess pay, whichever way the numbers are stacked up.Hidden gem that adds lustre to Scotland

JOHN Swinney, the finance secretary, will be at the Edinburgh offices of asset servicing company State Street today to announce more jobs in a sector that has been described as one of Scotland's hidden successes.

Hidden because it's not particularly well known or understood and because nobody has really been championing what it does.

Yet the expansion at State Street ought to be another indication that the financial services sector continues to kick on after the crisis in the banking industry.

State Street currently employs some 750 staff in a sector now accounting for about 5,000 throughout Scotland. It would be wrong to describe these as "back office" jobs; they're more "mid office", according to Scottish Financial Enterprise chief executive Owen Kelly, involved in processing international business transactions, share issues, derivatives and such like.

Scotland is now competing with Luxembourg and Dublin as a key European centre for asset servicing with blue chip companies such as Barclays, BNP Paribas, HSBC, Black Rock and JP Morgan among those with a significant presence in Dundee, Edinburgh and Glasgow. They have been drawn to these cities because of the skills available.

It's notable that this expansion has continued while the banking industry has gone through the mill and the insurers have been downsizing their operations. It supports the view that Scotland's financial services sector would not wither on the vine of the collapsed banks and would prove robust and resilient enough to reinvent itself.

Today's announcement is another step on the road to ensuring Scotland keeps its place in an important growth sector.