SPRING is a time when the spotlight traditionally shines on the amount leading executives at our biggest listed companies are paid, with shareholders given the opportunity to vote on remuneration reports and policies at annual general meetings.

Such are the huge sums of money often distributed in salaries and bonuses that reading the reports can be an eye-watering experience. But this year, as the UK faces its biggest inflation crisis for around 30 years, the sums being doled out seem even more out of touch with reality. Some people may argue that the salaries and bonuses being awarded in the current climate leave a bad taste in the mouth.

Annual UK consumer prices index inflation climbed to seven per cent in March, and it is forecast by the Bank of England to rise to more than 8% soon, following the huge hike in the energy price cap that will now be feeding through to household energy bills for typical dual fuel customers.

While the soaring cost of fuel is a key driver of the current surge in inflation, rising prices are being seen right across the economy, as consumers pay the price for the global supply-chain disruption that followed the pandemic and now issues thrown up by the Russian invasion of Ukraine.

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Things would not be so bad if wages were increasing at the same rate, but they are emphatically not. According to a report published in March by the Office for Budget Responsibility, the independent forecaster set up by the UK Government in 2010, real incomes will fall by 2.2 per cent this year. Not since the mid-1950s will the UK have seen living standards fall at such a fast pace.

In these circumstances, it would be reasonable to expect to see some restraint on executive pay at our leading listed companies, but of that it is difficult to see any sign.

Last week, shareholders in NatWest Group, formerly known as Royal Bank of Scotland, voted in favour of a new remuneration policy that could see the pay awarded to chief executive Alison Rose rise to as much as £5.2 million. This compares with the £3.6m taken home by Ms Rose for 2021, which included a base salary of £1.1m, a fixed share allowance of £1.1m and a long-term incentive award of around £1.2m.

The increase in remuneration Ms Rose could earn going forward reflects major changes ushered in by the new policy, including the replacement of the long-term incentive (LTI) scheme that had been in place for several years by a “market-aligned annual bonus and RSP (restricted share plan) construct for executive directors”.

The new policy, which will be phased in over two years, will result in a significant increase in total pay for executive directors, “with maximum variable pay set at 100% of base salary for annual bonus and 150% of base salary for RSP awards,” the bank notes in its latest annual report.

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NatWest had been braced for a significant rebellion over the policy at its annual meeting last week. Glass Lewis, the influential investor advisory group, had urged shareholders to vote against it, arguing that because it contained fewer performance metrics it would be easier to secure pay-outs.

The bank, for its part, notes in its annual report that the new policy follows “reservations” expressed by shareholders over the “lack of formulaic, weighted performance measures” in the current policy.

NatWest declares in the report that as the bank continues its journey back into private ownership, following its £45.5 billion bailout by UK taxpayers at the height of the financial crisis of 2008-2009, it was now time to introduce a “more market-aligned annual bonus and RSP construct for executive directors”, adding that the new policy would allow it counter its pay “falling too far behind our nearest competitors”. Recent share purchases by the bank from the Treasury have seen the Government stake in the lender dip to 48%.

In the event, the resolution proposing the new remuneration policy was passed at the annual meeting last Thursday, with only 7.25% of the voted shares going against it.

But while Ms Rose and the bank’s chief financial officer, Katie Murray, can look forward to seeing their already-considerable pay rising higher still, huge numbers of people around the UK are fraught with worry over the cost-of-living crisis. Indeed, that very point was recognised by Ms Rose the day after the bank’s annual meeting, when she stated that the lender was “ very aware of the challenges and concerns the cost-of-living crisis is causing for many of our customers up and down the country.”

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That came as the bank unveiled better-than-expected profits of £1.24bn for the three months to March 31.

It should be acknowledged that it is no easy job Ms Rose has. Only a select number of individuals have the skills needed to lead a bank that employs tens of thousands of people, spans multiple divisions and which continues to have the UK Government as its biggest shareholder. Under the watch of Ms Rose, the bank is once more making hefty profits.

But the rewards she enjoys for doing the job well will seem extraordinarily high to the average person at the best of times, let one during times of such acute economic pressure. It is hard not to question exactly how “aware” Ms Rose is of the cost-of-living crisis when she will earn millions of pounds for doing her job this year.

Of course, these are the rules of the game in corporate Britain, and Ms Rose is far from alone in being very well remunerated.

Ben van Beurden, chief executive of Shell, earned total remuneration of €7.4m (£6.3m) last year, 28% more than the year before, as the surge in oil and gas prices lifted annual profits to $19.3bn from $4.8bn. The boss of BP, Bernard Looney, earned £4.5m as his company benefited from the same market forces as Shell. He had earned total remuneration of £1.7m for the 11 months he spent on the company’s board after becoming chief executive in February 2020.

On a more modest scale, the chief executives of both STV and AG Barr, Simon Pitts and Roger White, have also enjoyed bumper rises in pay and bonuses as their respective companies reported healthy profits for 2021, following the havoc wrought by lockdowns the year before. Neither Mr Pitts nor Mr White were paid a bonus in 2020, the year pandemic hit.

Company bosses only get to their positions because of their abilities – leading a listed company is not something that many of us could or wish to do.

But at a time when living standards are under more pressure than they have been for decades, the levels of corporate pay currently being awarded do look incredibly out of touch.