If there was ever a business founded on, and fed by, good PR, the Pru is it. To sell its products the Pru needs to be seen as whiter than white. As an investment company that has done as much as anyone to push the case for adequate standards of corporate governance, it also has to be seen to be practising what it preaches. To have your chief executive resign amid allegations of a breach of Stock Exchange rules is only the half of it. It now transpires that despite repeated and very public denials of any suggestion of mis-selling, the Pru is lambasted in a Lautro report forjust such in the area of personal pensions.

Within months it faces disciplinary action over the affair.Your can argue until the cows come home about whether Mick Newmarch's sale of share options just ahead of two important announcements affecting the company was a breach of the rules. Even if the company knew the rules and thought Mr Newmarch within them,it was foolish in the extreme to allow him to go ahead It must have known how it would look. Sir Brian Corby, chairman, apparently cleared the transaction, so he should take at least some of the blame.There is, of course, a very respectable case for arguing that many of the rules governing share and option dealing by directors are a lot of unnecessary bureaucratic nonsense. But it is one thing to think that, another to say it and quite another still to jeopardise reputation by even coming close to a breach.Mr Newmarch has always been a man not afraid to speak his mind, an iconoclast ready to challenge accepted wisdoms. Unfortunately for him,, life assurance does not thrive on the unconventional approach It could take years for the Pru to rebuild reputation.. Measuring the market value of Andy Cole is easy because Manchester United is willing to pay £7m for him. Despite the horrors of Crinkley Bottom, audience measurement also gives a pretty good idea of what Noel Edmonds is worth to a TV company.

The Institute of Directors wants top performers in business to be rewarded like sports stars and entertainers, which is a perfectly reasonable position to take. The trouble is the transfer market in executives in many industries is highly illiquid - theyare not available very often - and there is no business equivalent yet of audience measurement. So we end up with abuses that bring into disrepute the excellent idea of a business star system - one that should routinely make men like Sir Paul Girolami into multi-millionaires for achievements like growing Glaxo into a world-beater.Cedric Brown's salary at British Gas, which has set back the cause of the business star system many years, was clearly a stab in the dark by a remuneration committee as muddled and confused as the rest of us about what he is worth.Indeed, just about every evaluation technique for directors' salaries is flawed. Inter-firm comparisons lead to pay policies based on above average remuneration, which of course continually raises the average. They make sense only where executives are genuinely mobile and being courted for jobs. Most are not.Awarding generous share options ties rewards to those of the shareholders, but also brings an undeserved bonanza in a bull market. Options make sense only as a relatively small part of a total remuneration package, or when their award is based in the first place on genuine performance measurement, which is rare.As with bonuses - on balance more useful than options - the key lies in agreeing those performance criteria, and especially in making sure they are based on improvements in shareholder value, itself a concept whose detailed definition is a minefield.If pay consultants used a fraction of the time they now spend on comparative surveys of executive earnings developing workable measurement systems for executive performance, they might get out of this mess they are now confined to.In the meantime, poor old Mr Brown is left defending his pay rise as "only" 28 per cent. To boot, it seems he may even have broken the spirit of the Institute of Directors' new guidelines.

These sensibly emphasise the importance of relating pay to performance. The changes at British Gas consolidated Mr Brown's performance related bonus in a largely flat rate pay package.. . Manufacturing output over the last four months grew faster than at any time since 1988, while export orders recorded the strongest growth in almost a decade, according to the latest survey of industrial trends by the Confederation of British Industry. Costs and prices rose more slowly than expected but manufacturers expect costs in the next four months to pick up at the fastest pace for four years, with domestic and export prices set to rise at the sharpest rate in five years. Andrew Buxton, chairman of the CBI's economic affairs committee, said competition meant cost pressures had not fed fully through into higher prices.