Pay for performance has been the great corporate governance goal of the past 30 years. Directors' interests must be aligned with those of shareholders to maximise returns, runs the argument. However, in a new report out today, the High Pay Commission debunks the myth that boardroom rewards have been successfully linked to corporate outcomes.

In research conducted by Incomes Data Services, we found that shareholders are not getting what they pay for. Instead, directors' packages have become increasingly complex and pay has risen inexorably – all in the name of ensuring that they do the best for the company.

Annual bonuses, incentive plans and share awards have all been designed to try to foster a link between pay and corporate performance. In the past 10 years, a corporate leader has seen his bonus increase from 48% to 90% of salary for meeting his targets. Share grants have doubled to 200% of salary and longterm incentive plans have increased by 700%.

These additional incentives have not come at the expense of executive salaries, which have increased by 64% over the period. Huge rises in executive pay over the past 10 years have been accompanied by mediocre company performance. In fact, if share prices are used as the crudest measure of corporate growth, they declined by 71% over the period.

Other measures of company success, such as total earnings, pre-tax profit and earnings per share, were up over the period but they were dwarfed by the rise in pay packages. Pre-tax profits rose by 50% and earnings per share by 73% over the past 10 years, but executives' long term incentive plans were up by 253% and annual bonuses increased by 187%. At the deepest point of the latest recession, when pre-tax profit was at its lowest point, the executive bonus level was still 134% higher than in 2000.

Salary growth bears no relation to either market capitalisation, earnings per share or pre-tax profit. There is also little or no relation between the total earnings trend and market capitalisation.

The dislocation between executive pay and company growth is starkest in Britain's banks. Analysis of boardroom pay among financial firms shows that executive rewards at the banks that had to sign up for government support or were effectively bailed out, far outstripped the rest of the sector. Average total earnings in the state-supported banks were just under £4m in 2010 compared to £1.7m in 2000, an increase of nearly 130%. Similarly, companies that have dropped out of the FTSE 350 over the period were found to have significantly higher levels of pay than those that survived.

Shareholders are mugs to pay over the odds for such lacklustre levels of company performance. The whole system needs to be shaken up and simplified.