Executives at Britain’s top companies saw their basic salaries rise 10 percent last year, despite the onset of the worst global recession in decades in which their companies lost almost a third of their value.
The Guardian’s annual survey of boardroom pay reveals that the full and part-time directors of the FTSE 100, the premier league of British business, shared between them more than £1 billion (US$1.66 billion).
Bonus payouts were lower, but the basic salary hikes were more than three times the 3.1 percent average pay rise for ordinary workers in the private sector. The big rise in directors’ basic pay — more than double the rate of inflation last year — came as many of their companies were imposing pay freezes on staff and starting huge redundancy programmes to slash costs.
The Guardian data also shows that a coterie of elite bosses at the helm of multinational corporations are seeing their overall pay packets soar ever higher. The 10 most highly paid executives earned a combined £170 million last year — up from £140 million in 2007. Five years ago, the top 10 banked some £70 million.
The UK Liberal Democrat party’s Treasury spokesman, Vince Cable, said: “The Guardian’s analysis shows the breathtaking cynicism involved in a lot of executive pay deals, which are unrelated to either personal or corporate performance and involve people who are very well off helping themselves to larger salaries when private sector wages in many companies are being cut.”
The stealth increases in basic pay took much of the sting out of falls in bonuses tied to the performances of their companies. Overall pay for directors of FTSE companies, including bonuses, fell by an average of 5 percent.
The average chief executive of a blue-chip firm now earns a basic salary of £791,000. However, adding bonus payments, share awards and the value of perks ranging from cars and drivers to school fees and dental work, the average pay package rises dramatically. Nearly a quarter of FTSE chief executives received total pay packages last year in excess of £5 million, and 22 directors now have basic salaries of more than £1 million.
The survey is likely to spark renewed calls for shareholders to take a tougher line to control boardroom pay. Earlier this year, Financial Services Secretary Lord Paul Myners accused shareholders of behaving like “absentee landlords.”
In the wake of the banking crisis, there has been a wave of shareholder revolts over directors’ remuneration. But even if investors vote against over-generous boardroom payouts, companies are not obliged to take their views into account.
“The recession has done nothing to stop the gap between top directors and the rest of their staff getting wider every year,” said Brendan Barber, general secretary of the Trade Union Congress.
“It is even more offensive when the Institute of Directors has called for spending cuts that would hit pensioners, the poor and low-paid public sector staff. We’ve already had the 1980s-style recession, it looks depressingly like we are going back to 1980s greed-is-good politics, too,” Barber said.
The highest paid boss last year was Bart Becht, the CEO of Reckitt Benckiser, whose brands include Harpic, Veet and Strepsils. He was rewarded with £36.8 million in pay, bonuses, perks and share incentive schemes. Becht, 53, a regular feature in the upper echelons of the annual Guardian survey, earned more than £80 million in the last three years.
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