British CEOs get big salary raises
Source: Agencies |
October 27, 2009, Tuesday
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Print Edition
Print Edition
THE leaders of Britain's top companies have pocketed recent large pay raises, research released yesterday found, helping offset a fall in bonuses after they were blamed for fueling the financial crisis.
The Incomes Data Services reports showing that the pay of chief executives of companies in the FTSE 100 index has increased by an average of 7.4 percent over the past financial year came as Britain's main opposition Conservative Party called for an end to large cash bonuses at retail banks.
The boost in salaries was double that of shop floor workers, outstripping the rate of inflation and helping offset a 29 percent drop in bonuses, which averaged 500,000 pounds (US$816,720), over the same period.
The net effect was a 1.5 percent drop in directors' overall remuneration - leaving them earning as much as they were in 2006 when the economy was booming and contrasting with a 5.2 percent year-on-year contraction in gross domestic product in the third quarter of this year.
"It seems extraordinary in the current climate that salaries have gone up by 7.5 percent, but looked at historically this is not out of line - this is actually the latest level of high increases in terms of salary going back 10 years," said Steve Tatton of IDS.
The Conservative Party said banks bailed out by the government should be prevented from offering more than 2,000 pounds in cash as bonus payments.
The party's Treasury spokesman, George Osborne, said the banks should only offer larger bonuses as company shares, a plan which echoes United States President Barack Obama's recommendations to limit executive compensation and use a mixture of cash and stock payments.
Osborne said cash earmarked for staff bonuses should instead be used to offer credit to struggling small businesses.
"This is still a credit crunch, and it would be inexcusable for banks to pay out big bonuses to their staff, when there are so many businesses that need that cash," he told Britain's GMTV television.
British Prime Minister Gordon Brown's government has warned banks which relied on bailout cash that it will not tolerate payment of large annual bonuses to executives.
The Financial Services Authority, an industry regulator, has urged banks to use investment banking profits to bolster balance sheets.
The Incomes Data Services reports showing that the pay of chief executives of companies in the FTSE 100 index has increased by an average of 7.4 percent over the past financial year came as Britain's main opposition Conservative Party called for an end to large cash bonuses at retail banks.
The boost in salaries was double that of shop floor workers, outstripping the rate of inflation and helping offset a 29 percent drop in bonuses, which averaged 500,000 pounds (US$816,720), over the same period.
The net effect was a 1.5 percent drop in directors' overall remuneration - leaving them earning as much as they were in 2006 when the economy was booming and contrasting with a 5.2 percent year-on-year contraction in gross domestic product in the third quarter of this year.
"It seems extraordinary in the current climate that salaries have gone up by 7.5 percent, but looked at historically this is not out of line - this is actually the latest level of high increases in terms of salary going back 10 years," said Steve Tatton of IDS.
The Conservative Party said banks bailed out by the government should be prevented from offering more than 2,000 pounds in cash as bonus payments.
The party's Treasury spokesman, George Osborne, said the banks should only offer larger bonuses as company shares, a plan which echoes United States President Barack Obama's recommendations to limit executive compensation and use a mixture of cash and stock payments.
Osborne said cash earmarked for staff bonuses should instead be used to offer credit to struggling small businesses.
"This is still a credit crunch, and it would be inexcusable for banks to pay out big bonuses to their staff, when there are so many businesses that need that cash," he told Britain's GMTV television.
British Prime Minister Gordon Brown's government has warned banks which relied on bailout cash that it will not tolerate payment of large annual bonuses to executives.
The Financial Services Authority, an industry regulator, has urged banks to use investment banking profits to bolster balance sheets.
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