Fat cat bosses raking it in

There’s no end in sight for UK workers’ wage pain – wage growth slowed yet again in June according to yesterday’s latest labour market figures – but for top chief executives, who have seen their pay soar by 11 per cent, it’s an altogether different story.

FTSE 100 top bosses saw their median earnings rise to nearly ÂŁ4m in 2017, up from ÂŁ3.53 million the year before, while UK workers received a mere 2 per cent pay boost over the same time period, according to research from the High Pay Centre and the Chartered Institute of Personnel and Development (CIPD).

UK workers on a mean full-time salary of ÂŁ29,000 would have to work nearly 200 years to earn the same as the average FTSE 100 CEO.

Shareholder revolt

The 11 per cent pay rise figure for the FTSE 100 chief executives excluded outliers at the very top – among these was Persimmon CEO Jeff Fairburn, who took home an eye-watering £47.1m in 2017, 22 times more than he did in 2016.

Another outlier, CEO Simon Peckham, at the helm Melrose, which took over GKN in a controversial hostile takeover earlier this year, received ÂŁ42.8m in 2017, 43 times what he earned in 2016.

At the time of the takeover, High Pay Centre director Luke Hildyard said Peckham’s pay constituted “extraordinary sums of money, 10 times higher than the average for a FTSE-100 chief executive, let alone an ordinary worker.

“Melrose are involved in a highly controversial takeover, supported by hedge funds and opposed by workers’ representatives,” he pointed out.

Many investors have sided with workers in a public outcry over runaway executive pay – at Persimmon’s AGM in April, nearly half voted to reject its CEO’s pay, while a quarter of shareholders failed to support Melrose boss Peckham’s pay.

Labour MP and chair of the business, energy and industrial strategy committee Rachel Reeves said in response to today’s High Pay Centre report that “excessive executive pay undermines public trust in business.

“When CEOs are happily banking ever larger bonuses while average worker pay is squeezed, then something is going very wrong,” she noted.

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

“If Boards and Remuneration Committee chairs are so out of touch they are prepared to waive through off-the-scale reward packages, then shareholders must strike back and hold them to account. If businesses don’t step up on executive pay, then government will need to step in.”

Government action call

So far, however, the government has failed to take action despite promises. In 2016, prime minister Theresa May pledged to introduce greater regulation on executive pay, including putting employees on company boards and having binding votes on pay.

But in the end these pledges were quietly dropped and replaced with watered down measures, such as requiring companies with over 250 employees to publish the pay gap between the chief executive and the average worker’ salary from 2019. The government has also proposed a ‘name and shame’ list of companies whose shareholders vote in the majority against executive pay packages.

Unite has criticised these measures as ineffective –  this information is, after all, already in the public domain.

Unite general secretary Len McCluskey said that today’s figures from the High Pay Centre “show that it is business as usual in Britain’s boardrooms.

“It is ten years since the casino bankers crashed the economy but nothing has changed. Excess in the City is alive and well,” he noted.

“Fat cat bonuses like these are a reminder that there is something very wrong with our economy. They may be popping the corks in the City but across the country working people are struggling.”

“Wages have endured a historic slump and are simply not keeping pace with the rising cost of living,” McCluskey added. “Interest rate rises will hurt many in a country with the highest personal debt in Europe. And to the shame of the sixth richest country on the planet, foodbanks are running out of supplies and children are going hungry during the summer holiday.

“Only an out of touch prime minister and an uncaring government would try to claim that our economy is thriving.”

McCluskey called on Theresa May to “get a grip”.

“The fat cats are taking all the cream while Britain’s workers work harder and earn less. We need tough action to rein in fat cat pay and a strengthening of trade union rights to organise and bargain for better wages on behalf of workers.

“If Britain’s boardrooms want workers to help make them profits, it is high time they paid them fairly and started acting responsibly. If they won’t, then the government’s duty is to force them to do so.”