Pay packets of top bosses soar as wage reform flops

Boardroom rewards on the rise despite measures to give investors more say

The Coalition’s efforts to crack down on the worst excesses of boardroom pay are having little impact and companies are flouting the spirit of the new regulations, according to the High Pay Centre.

The independent think-tank, a campaigner to cut the income gap between the super-rich and the rest of the workforce, analysed the pay of 67 FTSE 100 chief executives since new rules giving shareholders a binding vote on future pay policy came into force last October. It found that the average pay awarded in 2013 was £4.5m – up from the £4.3m recorded by fellow pay researcher Manifest/MM&K for 2012.

The findings come at a time of heightened political sensitivity over inequality as the economist Thomas Piketty’s Capital in the 21st Century, which claims that capitalism naturally widens the gap between rich and poor, takes the world by storm.

The Bank of England’s Governor, Mark Carney, also warned that a more unequal society was “amplifying the rewards of the superstar” as he pledged to help build a “more trustworthy” capitalism.

Although several major companies have seen significant rebellions on pay in recent months – such as Barclays, Standard Chartered and AstraZeneca – shareholders have not voted down either individual pay packages or future pay policy.

The highest-paid FTSE 100 chief executive last year was Sir Martin Sorrell, who was paid almost £30m last year.

The High Pay Centre also criticises the efforts of the UK’s biggest companies to skirt around requirements to compare pay increases for the chief executives with those given to their workforce.

Companies are allowed to choose a smaller group for comparison if they consider it appropriate, a loophole which has allowed the likes of British Airways’ owner, International Consolidated Airlines Group, to compare the pay of boss Willie Walsh with a pool of just 99 staff out of 60,000, the research says. The requirement has been “next to useless” in practice, the High Pay Centre claims.

Deborah Hargreaves, the centre’s director, said: “These figures show that the new regulations are not enough to bring top pay back to a level that is sensible, fair or proportionate. Over the past 15 years, pay for a FTSE 100 CEO has gone from being 60 times the average UK worker to 160 times, without any justification. All workers should share in a company’s success – our economy cannot succeed in the long-term if a tiny group at the top pull further and further away from everybody else.”

Outside the FTSE 100, shareholders have been more rebellious. The listed engineer Kentz had its pay policy shot down by investors at its annual meeting two weeks ago, becoming the first company to lose a binding vote on pay under the new rules.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
Arts and Entertainment
Kara Tointon and Jeremy Piven star in Mr Selfridge
tvActress Kara Tointon on what to expect from Series 3
Voices
Winston Churchill, then prime minister, outside No 10 in June 1943
voicesA C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
News
i100
Sport
footballBrighton vs Arsenal match report
Arts and Entertainment
Benedict Cumberbatch has spoken about the lack of opportunities for black British actors in the UK
film
News
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Tax Assistant

Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...

Recruitment Genius: Outbound Sales Executive - OTE £25,000

£16000 - £25000 per annum: Recruitment Genius: This is an exciting opportunity...

Ashdown Group: Java Developer / J2EE Developer - Watford - £45,000 - £47,000

£45000 - £47000 per annum + bonus + benefits: Ashdown Group: Java Developer / ...

Ashdown Group: Marketing Product Manager - (Financial Services) - SW London

£35000 - £38000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

Day In a Page

Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

What the six wise men told Tony Blair

Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

25 years of The Independent on Sunday

The stories, the writers and the changes over the last quarter of a century
Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

Homeless Veterans appeal

As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

Smash hit go under the hammer

It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

The geeks who rocked the world

A new documentary looks back at origins of the computer-games industry
Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

Belle & Sebastian is taking a new direction

Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea
America: Land of the free, home of the political dynasty

America: Land of the free, home of the political dynasty

These days in the US things are pretty much stuck where they are, both in politics and society at large, says Rupert Cornwell
A graphic history of US civil rights – in comic book form

A graphic history of US civil rights – in comic book form

A veteran of the Fifties campaigns is inspiring a new generation of activists
Winston Churchill: the enigma of a British hero

Winston Churchill: the enigma of a British hero

A C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
Growing mussels: Precious freshwater shellfish are thriving in a unique green project

Growing mussels

Precious freshwater shellfish are thriving in a unique green project
Diana Krall: The jazz singer on being friends with Elton John, outer space and skiing in Dubai

Diana Krall interview

The jazz singer on being friends with Elton John, outer space and skiing in Dubai
Pinstriped for action: A glimpse of what the very rich man will be wearing this winter

Pinstriped for action

A glimpse of what the very rich man will be wearing this winter
Russell T Davies & Ben Cook: 'Our friendship flourished online. You can share some very revelatory moments at four in the morning…'

Russell T Davies & Ben Cook: How we met

'Our friendship flourished online. You can share some very revelatory moments at four in the morning…'
Bill Granger recipes: Our chef serves up his favourite Japanese dishes

Bill Granger's Japanese recipes

Stock up on mirin, soy and miso and you have the makings of everyday Japanese cuisine
Michael Calvin: How we need more Eric Cantonas to knock some sense into us

Michael Calvin's Last Word

How we need more Eric Cantonas to knock some sense into us