Top company bosses’ pay rising at 20 times rate of ordinary workers
FTSE 100 directors’ total remuneration up 14 per cent on share award deals
James Moore is the Independent's Associate Business Editor and writes the Outlook City comment column from Tuesday to Friday. He also has a keen interest in disability issues and when not attempting to further injure himself playing wheelchair basketball.
Monday 18 November 2013
Bosses of companies in Britain’s FTSE 100 index have enjoyed a 14 per cent boost in total pay, despite rises still lagging behind inflation for the majority of workers in this country, a report today reveals.
The rise was fuelled by a 58 per cent surge in share-based “long term incentive payments” (LTIP), which have been criticised as overly complex and hard for investors to value when details are published in annual reports.
The report, published by Income Data Services, says that company bosses’ basic pay rises were relatively restrained at 4 per cent, pushing the median payment to £568,500, while annual cash bonuses actually fell by 8.8 per cent to £553,200. But the share-based “long term” payments more than made up for that decline. The median LTIP award for FTSE 100 directors increased to £1.2m, from £764,000. The report gets its figures from annual reports published between June 2012 and May 2013.
The Office for National Statistics said last week that total pay, including bonuses, across the labour market grew by 0.7 per cent in the three months to September 2013 compared with a year earlier. The 14 per cent rise in total earnings for FTSE 100 directors is, therefore, 20 times the rate of pay growth for most workers.
“Britain’s top bosses are back to their old tricks as their pay is growing 20 times faster than the average worker,” said TUC general secretary Frances O’Grady. “It’s one thing replacing bonuses with long-term incentive plans, but FTSE 100 companies are simply exploiting this change to make their fat cats even fatter.”
Steve Tatton, the pay report’s editor, noted that the sharp increase in total pay came despite last year’s “shareholder spring” which saw an unprecedented level of shareholder activism and resulted in the departure of executives including Andrew Moss at Aviva and David Brennan at AstraZeneca in the midst of pay controversies. Mr Tatton said the opacity of executive pay packages could be to blame.
“The vesting of large share awards is currently less visible to investors than salary increases and bonus pay-outs,” he said.
That may change with the introduction of a new requirement to include a single total pay figure for top executives following the introduction of new reporting rules last month. These could make the scale of long-term incentive payments much more obvious than at present.
Most listed companies’ annual accounts do not include vested share awards in the main “emoluments” table detailing directors’ pay. As such their value often has to be calculated from separately published information.
Shareholders are also set to get a binding vote on companies’ pay policy in addition to the current advisory vote on remuneration report.
Last week The Independent reported that investors had inflicted 65 defeats on US companies as part of the “say on pay” rules that give them a voice on executive remuneration. By contrast, there have been only 2 defeats in Britain this year, the lowest level since 2010.
- 1 Hair loss explained: How and why men go bald
- 2 Game of Thrones season 6: Jon Snow theorists believe Ned Stark's son may have a twin sister
- 3 Artist takes LSD, draws herself over different stages of the 9-hour trip to show its effects
- 4 iPhone 6s camera: features to include 4K video camera and flash for selfies
- 5 A pint of water every day is the key to losing weight, scientists say
Most expensive city to live in for expatriates: Luanda, Angola takes number one spot with Hong Kong and Zurich in top three
Video of Irish 'professional boxer' fighting Istanbul neighbourhood goes viral in Turkey
If Surrey were Syria: Social experiment shows what it's like to live under siege
Irish tourist filmed fighting with shopkeepers in Turkey says they 'messed with the wrong man'
House of Lords: Outcry as donors, fixers and MPs caught up in expenses scandal get peerages
Dresden riots: Protesters in Germany attack refugee buses shouting 'foreigners out'
France train shooting: US soldiers speak of the moment they stopped gunman and 'beat him until he was unconscious'
Labour leadership: Jeremy Corbyn accused of 'deluding' young supporters with 'claptrap'
'Women only' train carriages: Jeremy Corbyn unveils radical move to tackle public harassment
Black holes are a passage to another universe, says Stephen Hawking
Iain Duncan Smith 'should resign over disability benefit death figures', says Jeremy Corbyn
iJobs Money & Business
£25000 - £30000 per annum: Recruitment Genius: From modest beginnings the comp...
£35000 - £40000 per annum: Recruitment Genius: From modest beginnings the comp...
£15000 - £65000 per annum: Recruitment Genius: This is an exciting opportunity...
£18000 - £20000 per annum: Recruitment Genius: This is a fantastic opportunity...