Average FTSE 100 pay has climbed from £4.13m in 2010 to £4.96m today, reflecting the lack of progress made in reducing the pay gap between those in high-ranking executive positions and those in low and middle-income earning positions.
Under the previous coalition government, new proposals were brought into place meaning shareholders would have more power when it came to blocking “excessive” pay proposals – as well as payments for failures. The then business secretary Vince Cable unveiled a four-fronted approach including: greater transparency; more shareholder power to hold companies to account; more diverse boards and renumeration committees; and best practice led by the business and investor community. However, while shareholders do now have the power to voice opposition to pay policy at annual general meetings (AGMs), the average vote against pay awards across the FTSE 100 only stands at 6.4 per cent. High Pay Centre director Deborah Hargreaves said: “Pay packages of this size go far beyond what is sensible or necessary to reward and inspire top executives. It’s more likely that corporate governance structures in the UK are riddled with glaring weaknesses and conflicts of interest. “The coalition government introduced some welcome reforms in 2013 that have at least enabled us to get a better understanding of the executive pay racket. However, it’s clear that these reforms didn’t do nearly enough to start building a pay culture where everybody is rewarded fairly and proportionally for the work that they do.” Read more about executive pay:
The High Pay Centre has also revealed that only a quarter of FTSE 100 companies are Living Wage accredited, where the lowest hourly pay is £9.15 in London and £7.85 in the rest of the UK. Reacting to the new statistics, Frances O’Grady, TUC general secretary, branded them a disgrace. “After years of falling living standards it is a disgrace that top execs are taking an even bigger share of the rewards of growth. We need a recovery that works for the many and not just the few,” she added. “Ordinary employees need to be included in workplace pay committees to add some common sense and reality to boardroom pay decisions. They should not be a closed shop for an elite who are only interested in looking after their own.” Contradicting those statements, Adam Smith Institute deputy director Sam Bowman explained the gap and why shareholders may be averse to pushing back. “Investors see executives as extremely important to the value of firms, with the strategic decisions they make often determining whether a firm flourishes or goes bankrupt. For that reason, it can be sensible to pay a lot to get skilled executives with good judgement,” Bowman commented. “It’s not hard to find examples on both sides: when Steve Ballmer stepped down as CEO of Microsoft, the firm’s value increased by billions overnight. Compare Ballmer to Tesco’s CEO David Lewis, who investors judged would make the firm millions of pounds more valuable. A Steve Jobs can make a firm; a Steve Ballmer can break it.” By Hunter Ruthven
We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “Accept”, you consent to the use of ALL the cookies.
This website uses cookies to improve your experience while you navigate through the website. Out of these cookies, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may have an effect on your browsing experience.
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.