After three years of pay cuts, denied bonuses and strike threats, being a board member looks like it’s going to start being fun (or at least lucrative) again: a report by Incomes Data Services says bonus levels in FTSE 100 boardrooms have staged ‘a dramatic recovery’, jumping by an average of 22.5% over the past six months to just shy of £559,000. Salaries have taken a similarly pleasing upward trajectory, rising by 7% from last year. Could this be the strongest sign yet that UK plc is finally showing some confidence in economic growth?
It’s not just the big boys raking it in, either: according to the survey, which looked at 237 directors in 180 listed companies who had been in their post for at least two years, bosses of FTSE 250 companies have seen their total incomes (salary and bonuses) rise by 8%, and Small Cap directors’ pay went up by 5.3%. It’s cheering news for beleaguered board members, who saw payouts drop by 30% last year.
Smaller companies haven’t been quite as lucky, though: overall payments to directors at Aim-listed companies have fallen by 0.8% in the same period, which rather suggests SMEs are still struggling. IDS says smaller companies are generally hit harder by the recession, which might explain the drop – although many listed companies are yet to publish their annual reports, so we could still see an (albeit very slight) upturn.
Trade unions are, predictably, scandalised by the rises. Paul Kenny, the general secretary of the GMB general union, complained that while directors are enjoying their pay rises, workers are having to endure all manner of cuts. ‘Appeals to the elite who run our industries to exercise restrain on their pay is a waste of time. The only solution is to use the tax system to take the money off them,’ he complained.
Interestingly, though, a study released yesterday by manufacturing body the EEF found that the number of pay freezes and reductions has reached its lowest level since December 2008. The number of rises, on the other hand, has jumped by 1.5% - higher than any time in the last 12 months. Hmm.
Encouraging news that things are looking up for big business, then – but a note of caution to bosses: pay rises based on performance are all well and good, but push it too much, and workers won’t be impressed. A sudden bout of pay inflation certainly won't help our recovery.
In today's bulletin:
Osborne takes a chance with FSA regulatory shake-up
BP cancels divi and pledges $20bn ahead of Hayward's US grilling
Boardroom bonuses bounce back
Ethnic minorities still shut out of top professions?
Taking a hard line with latter-day Robin Hoods