Sudip Kar-Gupta and Kate Holton – Reuters October 28, 2011
Pay for Britain’s top directors rose almost 50 percent last year, prompting criticism from Conservative Prime Minister David Cameron and trade unions who both contrasted it with the plight of ordinary Britons struggling to make ends meet.
Research from Income Data Services – a unit of Thomson Reuters – showed that directors of companies on Britain’s FTSE 100 index of listed blue-chip companies enjoyed a 49 percent rise in total salaries last year.
That contrasts with a 3 percent rise for the FTSE 100 in the last business year that ran from April 2010 to the end of March 2011. Since then it has fallen over 3 percent, meaning the index has gained no ground at all over the last 20 months.
The total annual pay for the directors now averages 2.7 million pounds ($4.3 million), the survey added.
“This is a concerning report, particularly at a time when household budgets are very tight,” Cameron told reporters at a news conference in Perth, Australia.
Trade unions, traditional foes of Cameron’s Conservative Party, also attacked the findings, saying that the pay of top directors did not reflect the country’s current economic plight.
“With the FTSE 100 down on last year and most staff getting pay rises of less than 2 per cent, these bumper settlements prove that chief executive officers’ pay bears no resemblance to performance or economic reality,” TUC general secretary Brendan Barber said in a statement.
The Unite trade union said shareholders needed stronger powers to be able to curb excessive boardroom pay.
“This damning report shows just how much these pampered directors are removed from the lives of working people struggling to hold onto their jobs and paying soaring energy, food and transport costs,” said Unite General Secretary Len McCluskey.
Martin Sorrell, who is chief executive of FTSE 100 marketing group WPP , defended the salaries of Britain’s top directors.
Sorrell’s pay for 2010 rose to 4.2 million pounds ($6.7 million) due to a performance-related bonus as WPP recovered from a downturn in 2009 when he took home 2.3 million pounds. His pay fell between 2008-2009.
He said companies such as WPP were entitled to award pay rises if their profits were rising, and that the pay of UK executives had to be compared with that of rivals around the world, notably in America.
“We operate in a global environment. (U.S. rivals) Omnicom and IPG are held to a different standard. Are our pay levels competitive to our American competitors? The answer is no,” he told Reuters.
“The gap is material. You have to look at what happened in 2009, it was reduced. In 2010 we had record profitability and it looks like it will be the same case in 2011,” he added.
An economic thinktank said on Friday that it expected bankers — another target of public anger and of protesters outside London’s St Paul’s Cathedral this week — could expect a sharp drop in bonuses this year, falling to levels not seen for nearly a decade.