MP’s pay is now set by the Independent Parliamentary Standards Authority, MPs themselves do not have a role in setting their own pay. IPSA sets and regulates MPs’ salaries, pensions, business costs and expenses.
I do not support Proportional Representation in its rawest form as I believe the link between an MP and a constituency is vital. However, I think it is worth looking at the Additional Member System (AMS) which is in use in the Scottish Parliament and Welsh Assembly. You can read more about the AMS here.