Workers’ fury as top bosses’ pay soars by 21%

The average total earnings for a FTSE 100 executive is now £2.4m

(GETTY IMAGES)

Bosses’ pay surged by 21 per cent last year despite workers’ salaries struggling to outstrip the country’s 1.5 per cent rate of inflation.

According to a report by Income Data Services, the average total earnings for a FTSE 100 executive is now £2.4m, with the increase driven by a sharp rise in share- based pay. The figure for chief executives hit £3.3m with the average basic salary now standing at £832,000.

The report, covering the year to June, found a 44 per cent increase in long term incentive share awards, and a 12 per cent rise in bonuses. But basic pay saw only a muted 2.5 per cent increase. IDS, an employment information and research business, also found the average value of vested long-term incentive plan (LTIP) share awards for FTSE 100 chief executives was £1,993,500, highlighting how valuable these can be.

The research demonstrates the growing disparity between the pay of top bosses and ordinary workers. Since 2000, the average total earnings of FTSE 100 chief executives has increased by a staggering 278 per cent, while full-time employees have risen by just 48 per cent. A FTSE 100 chief executive now earns an average 120 times more than a full-time employee – in 2000, that figure was just 47 times.

According to Bank of England data, average weekly wages, adjusted for inflation, are still around 5 per cent below where they were when the Coalition was formed in 2010. And wages are a full 10 per cent lower than they were when the Great Recession began in 2008.

The sluggish growth in the pay of ordinary people is having a negative impact on the Government’s attempt to reduce Britain’s budget deficit despite the economy’s return to growth, because it is reducing the tax take.

It briefly nudged above inflation earlier this year only to fall back down, even though the rate now stands at 1.5 per cent, which is below the Bank of England’s 2 per cent target.

IDS said it was too soon to assess the impact of new reporting requirements that came into force in October 2013, which included a new requirement for companies to include a single total pay figure for top executives in annual reports, along with the introduction of binding shareholder votes on boardroom remuneration. But it said inconsistencies in the disclosure of certain reward elements has sometimes made it more difficult to discover how much a director has or will receive.

Steve Tatton, the report’s editor, said: “While the new rules seemingly signalled the start of a new era in remuneration disclosure and shareholder power, it remains to be seen whether the reforms will lead to an improvement in boardroom pay transparency.”

The TUC is expecting thousands of people to converge on London on Saturday for its “Britain Needs a Pay Rise” march. Its general secretary Frances O’Grady said: “Now we know who is benefiting from the recovery. For as sure as anything it is not the great majority of workers who continue to face cuts in their living standards. Every year people ask if this soaraway boardroom greed can continue. It seems it can.”