Public anger over pay is serious threat to UK business, IoD survey finds
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Version 0 of 1. Major companies are being urged to restrain boardroom pay to avoid damaging the reputation of British business after a survey of company directors found excessive executive pay poses the biggest threat to the public’s trust in business. A survey of members of the Institute of Directors (IoD), a business lobby group, found that 52% of companies see “anger over senior levels of executive pay” as a threat to public trust in business, ahead of 51% identifying product mis-selling or the unsympathetic portrayal of business in the media as problems. The survey, carried out on behalf of the High Pay Centre thinktank, will up the pressure on political parties to tackle executive pay in their general election manifestoes. Shareholders were given the power to veto proposed executive pay packages in 2013, but top pay has continued to prove controversial. Last week HSBC revealed that chief executive Stuart Gulliver received £7.6m in pay and bonuses in 2014, despite a slump in profits and a deepening row over tax avoidance at the group’s Swiss banking arm. The boss of Lloyds Banking Group, which was rescued by the taxpayer during the financial crisis, António Horta-Osório, was handed £11.5m in pay and share bonuses last year. The IoD survey showed 48% of firms either agreed or strongly agreed that falling trust in business was an important threat to the success of their own company, while 26% did not think it was important. Simon Walker, IoD director general, said performance-related pay can be a key driver of success. But, he added: “In some corners of corporate Britain pay for top executives has become so divided from performance that it cannot be justified. Runaway pay packages, golden hellos, and inflammatory bonuses are running the reputation of business into the ground. Large companies need to look closely at the role excessive pay is playing in fuelling an anti-business backlash from the public and some politicians.” Analysis by the High Pay Centre suggests that the pay of a FTSE 100 CEO is now around 160 times the average full-time UK worker, compared with about 60 times in the late 1990s. FTSE 100 bosses are paid an average £4.7m and have already made more money in 2015 than most UK workers will earn all year. Median earnings for full-time workers in the UK, who had been in their job for at least 12 months, were £27,200 in 2014. Deborah Hargreaves, the thinktank’s director, said: “These findings destroy the argument that criticism of excessive executive pay is somehow ‘anti-business.’ Outside the boardrooms of big corporations, ordinary small and medium-sized business owners are as appalled by the culture of top pay as anybody else. |