Third of FTSE 100 firms have cut bosses’ pay due to Covid

The Daily Telegraph - Business - - Business - By Michael O’Dwyer

MORE than a third of blue-chip com­pa­nies cut bosses’ pay dur­ing the pan­demic in a show of sol­i­dar­ity with staff fac­ing job losses, fur­lough and a chaotic fu­ture.

A to­tal of 36 firms in the FTSE 100 re­duced ex­ec­u­tives’ earn­ings in re­sponse to Covid-19, slash­ing or de­fer­ring their ba­sic salaries and can­celling short-term bonuses. Salaries at 14 firms were cut by 20pc – the same as the re­duc­tion for low-earn­ing staff placed on tax­payer-funded fur­lough.

Com­pa­nies are un­der grow­ing in­vestor pres­sure to show that ex­ec­u­tive pay is jus­ti­fied by per­for­mance fol­low­ing years of outcry over ex­cess.

The boss of money man­ager Schroders warned last week that share­hold­ers will take ac­tion if direc­tors do not share work­ers’ pain dur­ing the eco­nomic catas­tro­phe trig­gered by Covid.

Peter Har­ri­son said: “Ev­ery­one un­der­stands there are some in­dus­tries that are re­ally suf­fer­ing, but that should be uni­formly felt across the busi­ness and not just fall on the low­est.”

It came as new Trea­sury fig­ures showed that 9.6m jobs have been fur­loughed over the course of the cri­sis at a cost of £33.8bn to the state.

Bosses’ pay cuts were con­cen­trated in hard hit in­dus­tries in­clud­ing re­tail, hos­pi­tal­ity and con­struc­tion.

But cam­paign­ers warned that many of the pan­demic cut­backs were tem­po­rary, did not af­fect long-term share awards and did not sig­nal a sea change in firms’ ap­proach to re­mu­ner­a­tion.

Re­duc­tions have al­ready been re­versed at many firms, such as house builder Per­sim­mon, es­tate agent Fox­tons and lux­ury fash­ion com­pany Burberry.

The fig­ures were com­piled by the Char­tered In­sti­tute of Per­son­nel and De­vel­op­ment (CIPD) and the High Pay Cen­tre think-tank.

Peter Cheese, chief ex­ec­u­tive of the CIPD, said: “The bulk of cuts made so far ap­pear to be short-term and don’t sig­nify mean­ing­ful, long-term change.

“Pay among the FTSE 100 will prob­a­bly fall next year, but this is more likely to be due to wider eco­nomic cir­cum­stances rather than a fun­da­men­tal change in ap­proach to ex­ec­u­tive pay.”

The study found that me­dian to­tal pay for FTSE 100 bosses had fallen to £3.6m, its low­est since 2011.

How­ever, ex­ec­u­tives con­tinue to re­ceive pen­sion con­tri­bu­tions rep­re­sent­ing a far greater pro­por­tion of their to­tal salaries than their em­ploy­ees, the study found. The me­dian pen­sion con­tri­bu­tion for chief ex­ec­u­tives was £189,000 in 2019, or 24pc of me­dian salary, com­pared to just 7.2pc for the over­all work­force.

Newspapers in English

Newspapers from UK

© PressReader. All rights reserved.