Directors' pay rose 50% in past year, says IDS report
- 28 October 2011
- From the section Business
Pay for the directors of the UK's top businesses rose 50% over the past year, a pay research company has said.
Incomes Data Services (IDS) said this took the average pay for a director of a FTSE 100 company to just short of £2.7m.
The rise, covering salary, benefits and bonuses, was higher than that recorded for the main person running the company, the chief executive.
Their pay rose by 43% over the year, according to the study.
Prime Minister David Cameron, speaking in Australia, said the report was "concerning" and called for big companies to be more transparent when they decide executive pay.
Labour leader Ed Miliband said the pay increases were part of a "something for nothing" culture, since the stock market had not risen to match them.
A statement from IDS said that that figure suggested that "executive largesse is evenly spread across the board".
Base salaries rose by just 3.2%, although that was above the median rise recorded by IDS this week for average pay settlements of 2.6% for private sector workers.
The latest consumer price inflation figures showed inflation at 5.2%.
Directors' bonus payments, on average, rose by 23% from £737,000 in 2010 to £906,000 this year.
Around two-thirds of FTSE 100 companies are global operations, for whom the UK is a small part of their operation, including mining giant Rio Tinto.
The Unite union has called executive pay "obscene" and has called for shareholders to be given more power to hold directors accountable.
The union's general secretary, Len McCluskey said: "The Government should strongly consider giving shareholders greater legal powers to question and curb these excessive remuneration packages.
"Institutional shareholders need to exercise much greater scrutiny and control of directors' pay and bonuses.
"It's obscene and it shows that the City has learnt nothing during the financial troubles of the last four years."
"I think it is very hard to justify these sorts of pay increases," Deborah Hargreaves, chair of the High Pay Commission, told BBC Radio 4's Today programme.
"When you think the average pay is going up 1% or 2%, it's not even meeting price rises. These pay packages have become so complex that executives don't even understand it themselves.
"We have got a closed shop here and someone needs to break it open."
Brendan Barber, the TUC's general secretary, said: "Top directors have used tough business conditions to impose real wage cuts, which have hit people's living standards and the wider economy, but have shown no such restraint with their own pay.
"Reform should start with employee representation on remuneration committees, which would give directors a much-needed sense of reality."
Steve Tatton, who edited the IDS report, said: "Britain's economy may be struggling to return to pre-recession levels of output, but the same cannot be said of FTSE 100 directors' remuneration."
Mr Tatton said that while closer scrutiny of pay awards was expected in future, "remuneration committees will have to make sure that they are able to provide full and thorough justifications for the bonuses awarded."