?Rising executive pay a disgrace? ? as top ten FTSE 100 CEOs net ?156m

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.?

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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.?

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