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High pay of UK executives corrosive, report says High pay of UK executives corrosive, report says
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The high salaries of UK executives are "corrosive" to the economy, the High Pay Commission has argued.The high salaries of UK executives are "corrosive" to the economy, the High Pay Commission has argued.
The commission - set up by a pressure group - says the disparity between what top executives and average workers earn has been building for 30 years.The commission - set up by a pressure group - says the disparity between what top executives and average workers earn has been building for 30 years.
Its study lists a 12-point plan to stop "high pay creating inequalities last seen in the Victorian era". href="http://highpaycommission.co.uk/wp-content/uploads/2011/11/HPC_final_report_WEB.pdf" title="Link to High Pay Commission report" >Its study lists a 12-point plan to stop "high pay creating inequalities last seen in the Victorian era".
These include forcing companies to publish a pay ratio between the highest paid executive and the company median.These include forcing companies to publish a pay ratio between the highest paid executive and the company median.
The High Pay Commission was set up by pressure group Compass, with backing from the Joseph Rowntree Charitable Trust, to investigate boardroom pay.The High Pay Commission was set up by pressure group Compass, with backing from the Joseph Rowntree Charitable Trust, to investigate boardroom pay.
Its year-long inquiry found that the pay of top executives at a number of FTSE companies had risen by more than 4,000% on average in the last 30 years.Its year-long inquiry found that the pay of top executives at a number of FTSE companies had risen by more than 4,000% on average in the last 30 years.
Richard Evans, president of PepsiCo in the UK and Irish Republic, told the BBC that the UK has to be competitive with the rest of the world.Richard Evans, president of PepsiCo in the UK and Irish Republic, told the BBC that the UK has to be competitive with the rest of the world.
"If we want great people to come and work in the UK, given it's a global talent pool, we've got to be prepared to pay the amount of money that those executives can get elsewhere in the world," he said."If we want great people to come and work in the UK, given it's a global talent pool, we've got to be prepared to pay the amount of money that those executives can get elsewhere in the world," he said.
'Radical simplification''Radical simplification'
Former Barclays chief executive John Varley's salary was cited in the study.Former Barclays chief executive John Varley's salary was cited in the study.
It said he earned £4,365,636, which was 169 times more than the average worker in Britain today. It equates to an increase of 4,899.4% since 1980, when the top pay at Barclays was £87,323 and just 13 times the UK average, the report says.It said he earned £4,365,636, which was 169 times more than the average worker in Britain today. It equates to an increase of 4,899.4% since 1980, when the top pay at Barclays was £87,323 and just 13 times the UK average, the report says.
But Barclays has disputed this figures, saying they could not reconcile it with actual figures for Mr Varley's pay.But Barclays has disputed this figures, saying they could not reconcile it with actual figures for Mr Varley's pay.
The High Pay Commission also says the salary for the post of chief executive at the now partly state-owned Lloyds Bank has increased by more than 3,000% since 1980 to more than £2.5m.The High Pay Commission also says the salary for the post of chief executive at the now partly state-owned Lloyds Bank has increased by more than 3,000% since 1980 to more than £2.5m.
It says this is 75 times the average Lloyds employee's salary, when in 1980 it was just 13.6 times the average.It says this is 75 times the average Lloyds employee's salary, when in 1980 it was just 13.6 times the average.
A spokesperson for Lloyds Banking Group said: "We have requested the data from the High Pay Commission as we believe this report to be misleading. We are unable to reconcile the numbers."A spokesperson for Lloyds Banking Group said: "We have requested the data from the High Pay Commission as we believe this report to be misleading. We are unable to reconcile the numbers."
'Radical simplification''Radical simplification'
Average wages in the UK today stand at £25,900 per year, up from £6,474 in 1980 - a three-fold increase, according to the commission.Average wages in the UK today stand at £25,900 per year, up from £6,474 in 1980 - a three-fold increase, according to the commission.
The commission calls for a number of reforms, including a "radical simplification" of executive pay, putting employees on remuneration committees and publishing the top 10 executive pay packages more widely.The commission calls for a number of reforms, including a "radical simplification" of executive pay, putting employees on remuneration committees and publishing the top 10 executive pay packages more widely.
It says companies should be made to reveal the total pay figure earned by executives and a new national body to monitor high pay should be established.It says companies should be made to reveal the total pay figure earned by executives and a new national body to monitor high pay should be established.
High Pay Commission chairwoman Deborah Hargreaves said: "There's a crisis at the top of British business and it is deeply corrosive to our economy.High Pay Commission chairwoman Deborah Hargreaves said: "There's a crisis at the top of British business and it is deeply corrosive to our economy.
"When pay for senior executives is set behind closed doors, does not reflect company success and is fuelling massive inequality, it represents a deep malaise at the very top of our society."When pay for senior executives is set behind closed doors, does not reflect company success and is fuelling massive inequality, it represents a deep malaise at the very top of our society.
"The British people believe in fairness and, at a time of unparalleled austerity, one tiny section of society - the top 0.1% - continues to enjoy huge annual increases in pay awards."The British people believe in fairness and, at a time of unparalleled austerity, one tiny section of society - the top 0.1% - continues to enjoy huge annual increases in pay awards.
"Everyone, including each of the main political parties, recognises there is a need to tackle top pay.""Everyone, including each of the main political parties, recognises there is a need to tackle top pay."