A failure by the Government to clamp down on executive pay is to blame for the growing wealth gap between fat-cat bosses and the general workforce, according to a report out today.
The High Pay Centre think-tank said that despite promises from ministers, the remuneration culture has not changed. Business leaders' pay rose by an average of 12 per cent in the last financial year, according to the corporate governance specialist Manifest and consultancy MM&K, while the average worker's wages rose 2.8 per cent.
The research suggests that top-level pay rewards are ill-deserved as remuneration packages have tripled over the past decade while share prices have been broadly stagnant.
Deborah Hargreaves, director of the High Pay Centre, said: "There has been no clear change in the boardroom culture and no recognition that these pay awards are unacceptable. The issue of high pay will not resolve itself."
Although this year shareholders revolted over executive pay at companies such as WPP, Xstrata and Aviva, there are calls for government to step in. Measures have been introduced to give shareholders the power to veto executive pay increases, but the High Pay Centre said that a vote every three years on the issue is "unlikely to achieve significant change".
Campaigners want legislation or regulation so that pay committees must include a worker representative. They would like top-level pay simplified, so that confusing bonus and long-term incentive plans do not disguise pay hikes.
A Department for Business spokesman said: "It is not Government's role to interfere with the management of companies, but we do have a clear role to play in ensuring that shareholders have the right tools to challenge companies on excessive pay."
- More about: