Outcry at excess in the City as CEO’s pay hits £4m

BRITAIN’S CHIEF executives saw their salary packages increase by 11 per cent in the last year, in what unions have called a culture of “shocking boardroom excess”.

The increase compares to just two per cent for full-time workers and comes in spite of criticism from investors about excessive payments.

Research by the Chartered Institute of Personnel and Development and the High Pay Centre showed the median salary of chief executives in FTSE 100 firms had reached just under £4m.

Under the “mean” measure, which is more affected by large individual payouts, pay rose by 23 per cent to £5.6m, said the report.

But there was no evidence that more pay produced better performance, a Yorkshire academic said last night.

“Britain has one of the widest pay gaps in the EU, and CEO pay has been rising for the last 30 years,” said Peter Prowse, a professor of HR management and employment relations at Sheffield Hallam University.

“A boss might earn £1,200 an hour and earn in two or three days what the company pays most of its employees in a year.

“But there is no scientific or academic evidence anywhere to suggest that paying someone that much money will make any difference to the work they deliver nor improve the efficiency of their company.”

Likening the scale of executive salaries in Britain to the football transfer market, Prof Prowse said Japan had managed to improve productivity while narrowing the gap between employers and their workers.

The Leeds West MP Rachel Reeves, who chairs the Business, Energy and Industrial Strategy Committee, said: “When CEOs are happily banking ever larger bonuses while average worker pay is squeezed, then something is going very wrong.

“Recent revolts on pay awards show that shareholders are increasingly sharing this frustration at unjustifiable pay awards. Executive pay must match performance.”

Ms Reeves urged shareholders to “strike back” and hold companies to account, adding: “If businesses don’t step up on executive pay, then Government will need to step in.”

Len McCluskey, general secretary of the Unite union, said it was “business as usual” in Britain’s boardrooms, adding: “Excess in the City is alive and well.”

Tim Roache, of the GMB union, added: “These figures expose shocking excess in UK company boardrooms. We live in a country where company fat cats get paid 400 times more than the dedicated, hard-working carers who look after our nearest and dearest.”