UK: One-Minute Briefs - Research shows that not all top cats are fat cats.

UK: One-Minute Briefs - Research shows that not all top cats are fat cats. - Fat cats - it is a phrase that trips off the tongue and fits snugly into headlines. At September's TUC conference, they dominated the newspapers, gaining more unwanted labels su

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Last Updated: 31 Aug 2010

Fat cats - it is a phrase that trips off the tongue and fits snugly into headlines. At September's TUC conference, they dominated the newspapers, gaining more unwanted labels such as 'greedy bastards', 'bloated rodents' and 'executives who enjoy the politics of the pig trough'. But is British business really run by cream-hogging chairmen?

The answer is yes, and no. Resource consultancy William M Mercer surveyed the top 20 companies in the UK and found that the current average salary for chief executives is £549,000. Far more upsetting for TUC bosses is the incredible rate at which wages of some top bosses are growing. Market researcher Incomes Data Services and Arthur Andersen found that senior directors at the top 350 companies in the UK received pay increases of 17.8% in the last financial year.

Yet look outside this bracket of the top 350-companies and the picture is very different. A survey by the Institute of Management and Remuneration Economics, the market researcher, shows pay increases for executives in companies with an annual turnover of less than £60 million fell behind the overall average in the UK in 1997 and 1998. Directors of small companies received a mere 3.2% rise in earnings last year. The average chief executive in a small business with 250-500 employees earns £64,500, according to Remuneration Economics' figures. In companies with upwards of 1,000 employees, average pay is £145,000, but other small company directors receive £39,000.

One of the reasons for the disparity, says Paul Campfield of Remuneration Economics, is the different bonus schemes used by different sized companies.

While directors of the biggest companies have complex schemes, which often reward them for downsizing, smaller businesses tend to offer profit-related bonuses. When the smaller companies struggle, their senior executives' pay is reduced.

'Rewards for executives in small businesses closely reflect company performance,' says Mary Chapman, director-general of the Institute of Management. 'Executives in this sector tend to be closer to the front line and feel the impact of fluctuating business trends more acutely.'

Undeniably, there is a startling disparity between top management and their lowest-paid staff, and TUC chiefs aren't going to let Labour forget it. Yet the domain of the fat cats remains the multi-national or privatised utility; most UK directors and owners take home no more than the £55,000 earned by TUC president John Edmonds. Instead of arguing about 'greedy bastards', critics should perhaps focus on standardising methods of remuneration to reflect the responsibility shouldered by the bosses of smaller businesses as well as the top dogs (cats, rats or pigs) at the biggest firms.

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