Directors' pay rose 50% in past year, says IDS report

 

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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."

Highest paid chief executives 2010/11

Name Company Total earnings/£ Share price change Profit growth

Source: IDS Executive Compensation Review

Mick Davis

Mick Davis

Xstrata

£18,426,105

+14.4%

331.9%

Calendar year

Bart Becht

Bart Becht

Reckitt Benckiser

£17,879,000

-8.9%

10.4%

Michael Spencer (Photo: ICAP)

Michael Spencer

ICAP

£13,419,619

+39.5%

-5.7%

Sir Terry Leahy

Sir Terry Leahy

Tesco

£12,038,303

-10.5%

11.3%

Year to 26 February

Tom Albanese

Tom Albanese

Rio Tinto

£11,623,162

+10.2%

161.8%

Calendar year

'Complex' packages

"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."

 

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  • rate this
    +5

    Comment number 131.

    I don't think these folks realise how close they are to really big trouble. Ordinary folks are now getting angry and being pushed. I predict a...

  • rate this
    +7

    Comment number 130.

    Stressful my a*s - try standing in the middle of a dual carriageway A road dealing with a five car pile up, people dead, no street lighting and a speed limit of 70mph. No lights 'cos were having to save money on the council tax! Or try living on the interest from your invested golden handshake - Ah! isn't that what this 'great people' are suppose to be making sure I can do - they've failed.

  • rate this
    +7

    Comment number 129.

    Of course directors' pay is up, just like the government and bankers' pay is up. Take a look at the kind of people the abovementioned are. Freemasons and aristocrats all of them, and above having to contribute to society on account of their superiority over the rest of mankind. When the common people have been bled dry with new taxes, pay cuts and working longer, they'll take credit for fixing it.

  • rate this
    +8

    Comment number 128.

    Old people having their care costs cut and bosses keep giving themselves huge pay rises these people are a disgrace but they don't care. greed is all they understand.

  • rate this
    +6

    Comment number 127.

    108.S42Wolf
    1 Minute Ago
    These directors try to justify these obscene payments by saying they have a stressful job.
    Excuse me, the rest of us have stressful LIVES, trying to manage on our meagre salaries!


    In the civil service it was found that the stress was greater in the lower ranks, because the workers did not have the control over their tasks that would help them to do them better.

  • rate this
    +5

    Comment number 126.

    " nieuw divil
    Our companies need the best leaders and have to pay accordingly in a competitive market to get the best leaders"

    But leaders that have presided over destruction of shareholder value on the scale we have witnessed cannot be described as the "best leaders". Besides, if they truly work so hard they have no time or capacity to spend their remuneration and it's about "bragging rights".

  • rate this
    -17

    Comment number 125.

    Actually, here's an idea: Outlaw success. Make everyone slothful, miserable, under achievers and pay them poverty money equally across the board. Ban company start ups and educate our children from pre-school to have no ambition.

    That'll make the country fair and everyone will be happy.

  • Comment number 124.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this
    +13

    Comment number 123.

    this is just greed and is disgusting at a time when millions of jobs have been lost, when inflation is running at 5% and workers are getting a 'pay rise' of just over 2%. If the bosses need 50% pay increase then so must the workers. It is past time for this greed to be stopped!

  • rate this
    +11

    Comment number 122.

    If corporate bosses are paid the world market rate in order to retain their expertise. why aren't the workers paid a top rate in order to retain their expertise?

  • rate this
    +6

    Comment number 121.

    Unfettered greed and completely unjustifiable when those same directors expect their staff to take a pay cut in a majority of cases. Ninety eight per cent of the country's biggest businesses are afforded financial secrecy and tax levies by holding jurisdictions in 8,492 companies outside of the UK. The four big banks alone have 1,649 firms located in tax havens. All in it together though.

  • Comment number 120.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this
    +6

    Comment number 119.

    Dont expect or be lead to believe that the Government will do anything, they're all singing from the same hymn sheet.

  • rate this
    +12

    Comment number 118.

    It is always good to see we are to quote Dave ' in this together'. But perhaps Dave needs to define what this means, if anything. Because 50% increases in salary raises the spectre of greed rather than prudent example in these difficult times for many in the UK. Is it just a case of greed rules in the UK, OK

  • rate this
    +7

    Comment number 117.

    I have no problem with people rewarded for sucess.It is totally unacceptable when they take millions even when they fail or simpily doing their jobs. It's only fair the directors should reward the workers the same percentage as they reward themselves. John Lewis Partnership shows an excellent example.

  • rate this
    +7

    Comment number 116.

    We should make PLC's have to obtain a positive approval of 50% of shareholders to make large (>25 times lowest paid employees) pay packages. Also, shareholders such as Pension funds, unit trusts, ISA's, etc should be encouraged to canvas their members/investors opion before voting on PLC's pay votes. Government departments should lead by example having a max 20X ratio of highest to lowest paid.

  • rate this
    +1

    Comment number 115.

    I am a bit puzzled as to why this becomes the Governments problem? Why not just make everything Public Sector. I don't believe the bonuses linked to Director's pay is a result of just 'their' hard work alone if they are meeting targets set. People like more for less. Fair reflection of the culture of society nowadays.

  • rate this
    +1

    Comment number 114.

    15.Ian
    32 Minutes ago
    Is there a way to see a list of those companies where the increase is the largest ?
    ----
    Yes.

  • rate this
    +1

    Comment number 113.

    And the point of this really pointless study is ......

    Nothing will change, after all would you want to be the cause of your friends getting less money in their wage packets ? I'm sure Mr Cameron et al don't.

  • rate this
    +133

    Comment number 112.

    Are those 'at the top' aware of the bad feeling towards them? Do they have any clue about the sheer power the 99% would wield if pushed into action? It is almost as if it is a challenge - "we're untouchable". I'm sorry to tell you this guys, but you're not. Tell you what, give the money back now and we'll say no more about it. What do you say?

 

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