The debate concerning the pay levels of Britain’s top executives raises a number of issues concerning negotiating needs.

There has been considerable debate since the publication of figures by Incomes Data Services showing a 49 percent jump in total earnings of all FTSE Directors. This compares to a 2.6 percent increase for average workers. This comes on top of a 55 percent increase for FTSE Directors in the previous year. The average annual total of such remuneration is now £2.7 million.

At a time when ordinary families are facing a period of considerable belt tightening this kind of apparent extravagance jars, and has provoked reaction from politicians on all sides against “fat cat” behaviour. David Cameron called for more boardroom responsibility. Nick Clegg called the report a “slap in the face” for millions who are struggling.

From a deal-making point of view this kind of apparent disconnect can be reversed if the relevant parties focus on the emotional needs arising out of pay negotiations, rather than just on the size of the pay-cheque.

The participants in these negotiations tend to be CEO’s on the one side and remuneration Boards on the other. These Boards are often composed of Non Execs or other shareholder representatives. They will be looking for reassurance that they are doing the right thing in setting remuneration packages, and such reassurance often consists of knowing that other companies elsewhere are taking a similar approach. This kind of social conformity is an important element in the way individuals are influenced according to US influencing guru, Robert Cialdini. They will therefore also be mindful of wider debates in the economy about how Executives should be remunerated.

If there is a general feeling that CEO’s are paid too highly given the economic times in which we live then this will be factored in to their decision making too. However they will also want to make sure they keep their leading executives – this is the other side of their reassurance coin, making sure they are seen to be doing the right thing.

For CEO’s the negotiating need is more likely to be achievement. CEO’s are often big picture thinkers, wanting to create unique or innovative companies and this is often reflected in negotiations over remuneration. One of the points behind the headlines is that much of the benefit that they get consists of share options (rather than just salary) which may or may not turn into substantial value for them later. CEO’s will often gravitate to this kind of package because it chimes with their desire to achieve by building and developing a great company.

So, if there are reassurance needs on one side of the table and achievement needs on the other, it ought to be perfectly possible to construct CEO deals which are not just based around enormous salaries. CEO’s could work with the reassurance needs of remuneration committees by reducing the significance of larger salaries as an element in the negotiation. Remuneration committees can work with the achievement needs of CEO’s by focusing on those needs as an element in the negotiation: freedom to act, the opportunity to innovate, the opportunity to do something unique will normally excite a CEO just as much as a large salary in the Bank.