City bonuses are 'damaging long-term prospects'
The bonuses paid to City high fliers came under attack for creating "a culture of short-termism" that is damaging the prospects of businesses.
A report commissioned by Business Secretary Vince Cable said the financial sector is too heavily geared towards rewarding traders and middle men and not focusing enough on long-term investment and providing returns to shareholders.
Its author, London School of Economics professor John Kay, hit out at bonuses based on short-term performance and called for a "much needed shift in the culture of the UK's equity markets".
The report, which was set up to examine the impact of UK equity markets on the long-term performance of companies, was welcomed by investor bodies, although the British Chambers of Commerce warned against a "witch hunt" in the City.
Mr Kay advocated wide-ranging reform, including paying executives' long-term incentives in shares that do not vest until after they have left the company, and scrapping requirements for companies to report every three months.