Welcome to the new Independent website. We hope you enjoy it and we value your feedback. Please contact us here.

We are paid too much, admit business leaders

Business leaders believe they are overpaid and shareholders should have a greater say in setting executive-pay levels, a new report has found.

Two-thirds of bosses surveyed by the accounting firm Grant Thornton said that senior executives were paid too much, with the proportion in agreement rising to 77 per cent in Britain. The report follows more evidence that boardroom salaries are spiralling further away from those of ordinary workers.

The pay of Britain's top company bosses is rising at more than five times the rate of the average employee, who has seen a decline in wages in real terms, according to research out last week from Income Data Services (IDS).

Grant Thornton's survey, of 2,800 businesses in 40 countries, found that 67 per cent of business leaders think investors should have greater involvement in establishing remuneration policy.

The research comes after Vince Cable, the Business Secretary, unveiled measures to crack down on excessive boardroom pay before Parliament's summer recess. Mr Cable intends to cap generous pay deals, prevent rewards for failure and simplify the metrics behind remuneration schemes. He will also hand shareholders a vote every three years from 2014 on a company's pay plan.

However, the new accord has yet to cap rocketing executive pay. The total pay package for the typical chief executive of a FTSE 100 company hit £3m for the first time last year, an increase of 8.5 per cent, according to IDS. The rate of growth has slowed markedly from the 49 per cent rise reported 12 months ago, but it still compares favourably with the 1.6 per cent average hike for workers nationally – which is less than half the rate of inflation.

"Dialogue between boards and investors is essential to good governance," said Simon Lowe, chairman of the Grant Thornton Governance Institute. "That 67 per cent of global business leaders want investors to get more involved in setting executive remuneration is encouraging."

Bosses have felt investors' anger at excessive pay this year, with the "shareholder spring" claiming scalps at the insurer Aviva, the drugs giant AstraZeneca, and the publisher Trinity Mirror.