Friday, 28 October 2011
Proof we are definitely not 'all in this together' - Directors pay jumps 49% in one year!
At a time when high inflation, high unemployment, and low wage growth are weighing down on UK household budgets a report has been published demonstrating how we are definitely NOT "all in this together".
With pay freezes being imposed on the vast majority, the 'cosy club' of people sitting in boardrooms, and who also sit on renumeration committees, are rewarding themselves handsomely ...
Today an IDS report confirmed that FTSE 100 directors have seen their pay increase by a staggering 49% in just one year ... and this is a very large percentage increase on an already very large salary!
The problem is that the vast majority of people sitting in boardrooms and on renumeration committees are also directors themselves ... so these people are effectively live in an 'incestuous world' where they all vote to push up boardroom pay and give each other a big pay rise ... however good/bad their company is doing!
Average FTSE 100 director pay is now up to £2.7m, including fixed pay, benefits, bonuses, value of long-term incentive plans and gains made on the exercise of any share options cashed in during the year.
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," said Steve Tatton, editor of the IDS report.
IDS said: "At a time when employees are experiencing real wage cuts and risk losing their livelihoods, it may be difficult for FTSE 100 companies to justify the significant increase in earnings awarded to their directors ... the pay gap between the boardroom and the shop floor does not yet show any signs of closing."
Which is a complete understatement ... the gap is actually widening rapidly and at an increasing rate ... not just in percentage terms ... but in terms of actual value too (pay rise of £0 compared to a pay rise of over £1m)!
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."
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."
Deborah Hargreaves, chair of the High Pay Commission, also said "We have got a closed shop here and someone needs to break it open."
In a recent speech Ed Miliband also said this must be challenged ... let's see if he speaks up about this again and does something about it now ... or let's see if he chooses to quietly walk away from the challenge after finishing yet another attention grabbing and crowd-pleasing speech!
It's a shame so many people are either ignorant or apathetic ... and also have such short term memories!