THE wages taken home by chief executives of FTSE-100 firms soared by almost one-third last year while the average worker saw their pay increase by just 2%, according to a new report.
Corporate heads saw their median wage – the figure midway between the highest and lowest wage – rise by 32% to £3.5 million. The earnings of the average worker grew at just half the rate of inflation over the same period, according to a survey by MM&K, a consultancy firm that examines pay strategies in companies, and Manifest, an agency that advises shareholders on how to vote in company meetings.
Increases in pay outstripped the growth of the Footsie itself, which grew by just 9% in 2010.
Workers have experienced the most severe pressure on earnings since the 1920s while FTSE-100 company chiefs draw wages that are up to 120 times larger than their staff.
In 1998, senior staff earned 45 times the average wage. While the median salary rise for the chief executives was also 2%, their wages were swelled by a 70% increase in bonuses and share option schemes.
The SNP said the public see the huge wages as “unpal-atable”, while Brendan Barber, general secretary of the TUC, said they now “bear little resemblance to economic reality”.
Stewart Hosie MP, SNP Treasury spokesman, said: “Chief executives of FTSE-100 com-panies are appearing slow to recognise how unpalatable people find the level of bonuses made to senior executives. They have to realise how toxic this issue is in the real world.
“I have already said that as we see many people concerned about job security or struggling to balance household budgets, chief executives should not be considering a bonus bonanza.
“I have suggested to the UK Government that bonuses, where and if they must be paid, should be issued in shares and, therefore, be locked into the longer-term performance of the businesses.”
The report also found the committees set up to decide pay and bonuses for senior workers were struggling to stay independent from chief executives.
Sarah Wilson, chief executive of Manifest, said: “There is a level of frustration that remuneration committees are developing a ‘tin ear’ and don’t see high levels of voting dissent as something to be concerned about.”
A number of banks have faced shareholder rebellions over the wages of their bosses.
Standard Life, the Scottish insurer, recently defended its decision to increase directors’ pay by 35% last year.
Chairman Gerry Grimstone insisted the huge wages were necessary to attract the best talent to Edinburgh.
However, some shareholders disagreed, with 11.5% of them voting against approving of the directors’ remuneration report for 2010 at an annual meeting earlier this month.
One-fifth of shareholders voted against HSBC’s remuneration plans for senior staff at its annual meeting last week.
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