Britain’s top execs saw their salary increase by 10% last year despite the recession, according to the Guardian’s latest annual survey on boardroom pay. Apparently FTSE 100 directors’ combined pay in 2008 was more than £1bn, despite the index plummeting in value by a third. We’re all for credit for credit’s due, but that surely can’t be right. If UK plc isn’t careful, its top earners are in danger of being tarred with the same brush as all these overpaid bankers…
On the plus side, bonus payouts were lower, as you’d expect. But by way of consolation, directors enjoyed big salary hikes that were more than three times the 3.1% average rise for private sector workers, and over twice the rate of inflation. According to the findings, the average blue-chip’s CEO enjoys a basic salary of £791,000. And if you take bonuses, share awards and perks into account, that rises dramatically: nearly a quarter of FTSE 100 CEOs were paid in excess of £5m, while the ten top-earning execs coined a mind-blowing £170m between them (up from £140m in 2007, and including £36.8m for Reckitt Benckiser boss Bart Brecht).
A year on from the anniversary of the collapse of Lehman Brothers, with all that told us about the hubris in the banking sector, it’s fair to say that executive pay is still top of the agenda. Only this morning on the Today programme, Merrill Lynch boss John Thain was defending the billions in bonuses his loss-making bank paid out last year, arguing that these people were running successful divisions and making profits for the bank. Since they bore no responsibility for the bank’s huge losses, why should they lose out, he argued? We can see his point, but it can’t be easy for shareholders to swallow.
And these executive pay numbers create a similar perception problem. The bosses concerned may bear no responsibility for the crash (everyone seems quite happy blaming the bankers for that) and they may have been working their socks off to keep their firm ploughing ahead regardless, making the best of a bad job. But at a time when shareholders have been hammered, and workers on the shop-floor are either losing their jobs or being forced to endure pay freezes, hefty salary hikes like these are very hard to justify. Indeed, they’re unlikely to go down well with anyone – tax-paying public, shareholders, the Government, City watchdogs, the list goes on. OK, so bosses shouldn’t be punished for something that wasn’t their fault. But news that they still pocketed in excess of £1bn in a rotten year like the last one suggests the calculations are going wrong somewhere.
In today's bulletin:
Britain’s top bosses see pay soar despite bust
France Telecom forced to account for human cost of restructuring
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