Outrage as report reveals soaring pay for UK chief executives
A NEW study revealing that UK chief executives' pay has soared by 10pc over the past year has sparked outrage.
An annual survey by analysts Manifest and pay consultants MM&K showed that pay for performance "was still not working", with average chief executives' pay increasing to over £4.2m (€5m).
Research among more than 580 leading companies revealed that the UK's top 100 chief executives were paid £425m in 2012, up by £45m, or 10pc, from 2011.
Top pay has pulled away even further from earnings in smaller firms, said the report.
The increased payments were almost entirely due to Long Term Incentive Plan (LTIP) payouts.
"With the FTSE 100 Index reaching record highs (it recently hit 6,900), it's not surprising that the average top 100 chief executive officer (CEO) saw their total pay rise by 10pc to £4.25m," said the report.
"The CEO pay increase is entirely due to increases in amounts of so-called "performance-related pay" which is linked to share price movements.
"While the average basic salary saw no change in 2012 over 2011, this is due to the lower pay of new appointees and changes to the make-up of the top 100 index. On the other hand, Long Term Incentive Plan (LTIP) payouts rose 40pc."
The long-term trend since 1998 shows a "huge growth" in bonus payouts and more recently the trend to defer part of a bonus, the research found.
The report added: "The significant sums paid to the top 100 CEOs are not reflected in what is paid elsewhere where payments tend to be much more modest. In smaller companies often the challenge is to have more performance related pay as there is evidence of insufficient alignment of executives and shareholder value creation."
TUC general secretary Frances O'Grady said: "With wage growth falling to its lowest level in decades, it’s outrageous that top CEO pay is now rising ten times faster than average wages. If top bosses hog all the gains from improved company performance for themselves then very few people will see any real benefit from an economic recovery."
Len McCluskey, Unite general secretary said: "These figures show that it's business as usual for the super rich. Despite a flatlining economy, the bonanza in Britain's boardrooms continues while demand for food banks rises as working people struggle to make ends meet in the face of pay freezes and below inflation pay rises.
"Soaraway executive pay is one of the scandals of our time. A total of 14pc of the nation's wealth is now concentrated in the hands of just 1pc thanks to lottery style salaries.
"It's unsustainable for the Government to turn a blind eye to unfettered greed. They need to follow the lead of other European countries in clamping down on excessive executive pay."
British Business Secretary Vince Cable added: "We want shareholders to be able to challenge companies where they feel that top pay does not match a company's performance, especially at a time when the global economy is fragile.
"Our package of measures, coming into force this October, are the most radical and far-reaching reform of pay in a decade.
"Companies will be bound by their pay policy which will create the right environment for long-term and responsible private sector growth. This will in turn support a stronger economy and fairer society."