We are paid too much, business chiefs admit
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 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 a package of 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 dizzying 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.
"Historically within the UK we have seen some reticence among investors to actively engage in this process. However this appears to be changing, according to the latest Investment Management Association (IMA) survey, which has reported a rise in investor interest in greater engagement. This confirms the growing sentiment reflected by the recent investor spring, in which the investment community came out in force to challenge a number of remuneration proposals."
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 newspaper publisher Trinity Mirror. Campaigners want to ensure it is more than a flash in the pan.
On the other side, executives including Sir Martin Sorrell, boss of the marketing giant WPP, have been swift to remind the City that good performance needs to be rewarded with good pay, especially if big firms are creating jobs and boosting the Government's tax take.
Grant Thornton's survey of 2,800 businesses in 40 countries also found that 77 per cent of respondents thought that public companies should disclose the pay policy and individual remuneration of executive and non-executive directors, which largely happens in Britain already. Four-fifths emphasised that the roles of chairman and chief executive should be held by different people to improve boardroom oversight.
- 1 Malaysian cyclist could face disciplinary action after 'Save Gaza' gloves protest
- 2 Is Gideon Levy the most hated man in Israel or just the most heroic?
- 3 McDonald’s removes chicken nuggets from the menu in Hong Kong amid major food scare
- 4 Students offered grants if they tweet pro-Israeli propaganda
- 5 Satellite full of sexually experimental geckos adrift in space, Russia loses control of mission
Israel-Gaza conflict: Israeli targeting policy under scrutiny after shellfire hits a mother and child, a school full of refugees and a doctor’s home
Iraq crisis: Isis orders Mosul shop keepers to cover mannequins
Comic Con 2014 attendees
Students offered grants if they tweet pro-Israeli propaganda
McDonald’s removes chicken nuggets from the menu in Hong Kong amid major food scare
Malaysia Airlines MH17 crash: Vladimir Putin is given 'one last chance' to end hostilities in Ukraine
The 'scroungers’ fight back: The welfare claimants battling to alter stereotypes
The truth about conspiracy theories is that some require considering
Arizona execution lasts two hours as killer Joseph Wood left 'snorting and gasping' for air
Malaysia Airlines MH17 crash: Ukrainian military jet was flying close to passenger plane before it was shot down, says Russian officer
Malaysia Airlines MH17 crash: Massive rise in sale of British arms to Russia
iJobs Money & Business
£600 - £650 per day: Orgtel: Conduct Risk Liaison Manager - Banking - London -...
£18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...
£280 - £300 per day + competitive: Orgtel: Test Analyst, Edinburgh, Credit Ris...
£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...