Asymmetry in pay-packet

Asymmetry in pay-packet

	Published : Fri, 04 Nov 2005 17:05 By : James Rowe Print this Story

According to a survey carried by Income Data Services (IDS), the pay consultancy, company directors in the UK are earning for the first time more than 2 million pounds a year on an average. Most of the 1,500 executives surveyed are employed in FTSE-100 index companies.

IDS said that the pay received by FTSE 350 directors inclusive of bonuses increased by an average of 18.1 per cent compared to 2004 last year. IDS said it had not seen such high-income levels since they started keeping track of top directors’ remuneration. At the same time, the average pay increase over the year in the UK, excluding directors, was between three and 3.5 per cent

However, sounding a word of caution, the report added: “The long-term consequence of these trends will be to add further fuel to existing concerns about the widening pay gap between the boardroom and shop floor.”

Directors' pay is soaring so rapidly that the rate of growth of their pay is more than four times the wages in the overall economy. This is attributed to the surge in performance-related bonuses and pays being dangled by companies to attract top-notch talent from other business houses.

This has become an issue for political debate. "The sky high increases of top executive pay show no sign of slowing. Whilst ordinary workers are happy to accept pay rises in the region of 3.5 per cent, the bosses of the UK's top 350 companies are rewarding themselves pay packets that are almost six times bigger, says Brendan Barber, TUC General Secretary.

In 2003, GlaxoSmithKline Plc had to review its pay plan after some accused it of being too biased in the favour of directors.

Steve Tattoon, editor of the IDS Executive Compensation Review, said: "Some shareholders are trying to keep a lid on executive pay, but these figures suggest that remuneration committees are still finding ways of inflating the overall reward package."

In January, The government had backtracked from its plans to draft a legislation that would restrict pays of executives citing that companies were adhering to its wishes on compensation.