Concern about pay levels at some of the larger Irish public companies has resulted in an examination by the Irish Association of Investment Managers of the composition of remuneration committees at these companies. Remuneration committees comprise company directors and advise their boards on executive pay and perks. IAIM chief executive Ms Ann Fitzgerald confirmed it had started an assessment of remuneration committees of Irish public quoted companies.

"We have begun evaluating this year's annual reports. We are focusing first on companies whose disclosure is inadequate, whose remuneration is excessive or where the composition of the remuneration committees does not meet accepted standards," she said.

The IAIM is basing its assessment on the combined code on corporate governance included in the listing rules of the London and Irish Stock Exchanges. Under this code, the members of a remuneration committee should be "independent non-executive directors".

Concern about excessive pay levels increased recently when the Jefferson Smurfit Group annual report showed chairman and chief executive Dr Michael Smurfit last year received total remuneration of €6.6 million (£5.2 million) from the group and its US associate. His remuneration was almost five times that of AIB chief executive Mr Tom Mulcahy, even though AIB's stock market capitalisation is about four times that of Smurfit.

In its 2000 annual report, Smurfit quoted the definition of an independent director as someone who is "independent of management and free from any business or other relationship, which could materially interfere with the exercise of their independent judgment".

Market sources said directors could be seen as independent where they were not former executives of the company, were not receiving consultancy fees from the company, were not retained to provide legal or other advice or consultancy services and had not served as a non-executive director with the company for more than 10 years.

Disclosure of detailed remuneration information is now a Stock Exchange requirement for Irish publicly quoted companies with effect from accounting periods ending December 31st, 2000. The annual reports of publicly quoted companies must include a remuneration report.

The code requires that remuneration levels should be reasonable, but not excessive and it recommends that a proportion of remuneration should link pay awards to corporate and individual performance.

It is understood that some fund managers are more concerned about the structures within companies for determining executive pay, incentives and other bonuses than with their actual levels. They feel that it would not be appropriate for shareholders to determine the levels of reward to be allocated to senior executives. But they argue that it is important shareholders are able to rely on genuinely independent directors to ensure the reward levels are fair.

Ms Fitzgerald said that when its assessment was completed IAIM would consider whether or not there was a need for more specific guidelines on remuneration committees and other matters than the code provided.