I was shocked to read in the recent Guardian annual survey on pay. Our members are going to be asked whether they want to accept another pay cut..........
Boardroom pay at the UK's top companies soared 37% last year as full-time directors were rewarded with inflation-busting increases in basic salaries, big cash bonuses and substantial payouts from share schemes.
The surge in pay, which takes the average total pay for a chief executive to £2,875,000, is more than 11 times the increase in average earnings and nearly 20 times the rate of inflation as measured by the consumer price index. The ratio between bosses' rewards and employees' pay has risen to 98:1, up from 93:1 a year ago - meaning that the work of a chief executive is valued almost 100 times more highly than that of their employees.
The figures are revealed in the Guardian's annual survey of executive pay at the 100 biggest companies on the stock market, conducted in association with the pay consultancy Reward Technology Forum. The pay rise for the 2006/07 financial year is the biggest in recent years. The previous year directors' pay climbed 28%, following rises of 16% and 13%.
For the first time last year the rewards handed over to the directors of FTSE 100 companies topped £1bn. The news comes after the Guardian revealed that bonuses for City workers rose 30% last year. And the huge rewards are being paid at a time when increasing numbers of homeowners are facing the threat of repossession and household debt is at record levels.
The TUC general secretary, Brendan Barber, said top directors were "losing touch with reality" and described the disparity in rewards as "morally offensive".
Topping the league of FTSE 100 directors' pay is Bob Diamond, who heads the investment banking arm of Barclays Bank and earned £23m last year. Mr Diamond, who is not chief executive of the bank, earns a basic salary of only £250,000, but his package was magnified nearly 100-fold as a result of a performance bonus of £10m and about £12m in share awards.
Three other top earners earned eight-figure salaries. They include Bart Becht, chief executive of Reckitt Benckiser, the company behind household brands such as Cillit Bang and Mr Sheen, and Giles Thorley, the boss of the Punch Taverns pubs group. Their pay last year was £22m and £11m respectively. Mr Thorley also emerges as the boss whose salary is most out of line with his employees; his remuneration package is equal to 1,147 of his employees, mostly pub workers.
Lord Browne, the former chief executive of BP, received £11m. He was forced to step down earlier this year after it was revealed he had lied in court.
Part-time chairmen of top companies - who generally work no more than two days a week - now earn an average of £311,000, up 15% on a year ago.
The Equal Opportunities Commission described that statistic as "shocking".
The 37% increase in average pay was fuelled by annual cash bonuses and gains from long-term, share-based incentives which enabled executives to cash in on rising share prices. Basic boardroom salaries were up just 5%. Including cash bonuses and other benefits the average increase was 13% - but it was stock market gains that provided the bumper returns.
Mr Barber said: "It is impossible to believe that top directors have become so much more productive than the rest of their staff over the last year. This growing gap is not just morally offensive but hits workforce morale, feeds through into house price inflation and threatens social cohesion. Britain's boardrooms are slowly losing touch with reality."
Miles Templeman, director general at the Institute of Directors, said "exceptional performance should be rewarded" and pointed out that pension funds would also benefit from a rising stock market.
For full article go to:
http://business.guardian.co.uk/story/0,,2157974,00.html#article_continue
The surge in pay, which takes the average total pay for a chief executive to £2,875,000, is more than 11 times the increase in average earnings and nearly 20 times the rate of inflation as measured by the consumer price index. The ratio between bosses' rewards and employees' pay has risen to 98:1, up from 93:1 a year ago - meaning that the work of a chief executive is valued almost 100 times more highly than that of their employees.
The figures are revealed in the Guardian's annual survey of executive pay at the 100 biggest companies on the stock market, conducted in association with the pay consultancy Reward Technology Forum. The pay rise for the 2006/07 financial year is the biggest in recent years. The previous year directors' pay climbed 28%, following rises of 16% and 13%.
For the first time last year the rewards handed over to the directors of FTSE 100 companies topped £1bn. The news comes after the Guardian revealed that bonuses for City workers rose 30% last year. And the huge rewards are being paid at a time when increasing numbers of homeowners are facing the threat of repossession and household debt is at record levels.
The TUC general secretary, Brendan Barber, said top directors were "losing touch with reality" and described the disparity in rewards as "morally offensive".
Topping the league of FTSE 100 directors' pay is Bob Diamond, who heads the investment banking arm of Barclays Bank and earned £23m last year. Mr Diamond, who is not chief executive of the bank, earns a basic salary of only £250,000, but his package was magnified nearly 100-fold as a result of a performance bonus of £10m and about £12m in share awards.
Three other top earners earned eight-figure salaries. They include Bart Becht, chief executive of Reckitt Benckiser, the company behind household brands such as Cillit Bang and Mr Sheen, and Giles Thorley, the boss of the Punch Taverns pubs group. Their pay last year was £22m and £11m respectively. Mr Thorley also emerges as the boss whose salary is most out of line with his employees; his remuneration package is equal to 1,147 of his employees, mostly pub workers.
Lord Browne, the former chief executive of BP, received £11m. He was forced to step down earlier this year after it was revealed he had lied in court.
Part-time chairmen of top companies - who generally work no more than two days a week - now earn an average of £311,000, up 15% on a year ago.
The Equal Opportunities Commission described that statistic as "shocking".
The 37% increase in average pay was fuelled by annual cash bonuses and gains from long-term, share-based incentives which enabled executives to cash in on rising share prices. Basic boardroom salaries were up just 5%. Including cash bonuses and other benefits the average increase was 13% - but it was stock market gains that provided the bumper returns.
Mr Barber said: "It is impossible to believe that top directors have become so much more productive than the rest of their staff over the last year. This growing gap is not just morally offensive but hits workforce morale, feeds through into house price inflation and threatens social cohesion. Britain's boardrooms are slowly losing touch with reality."
Miles Templeman, director general at the Institute of Directors, said "exceptional performance should be rewarded" and pointed out that pension funds would also benefit from a rising stock market.
For full article go to:
http://business.guardian.co.uk/story/0,,2157974,00.html#article_continue
