Monday, October 31, 2011

The Wealth Gap Grows

Pay for the directors of the UK's top businesses rose 50% over the past year Incomes Data Services (IDS) said. The average pay for a director of a FTSE 100 company to just short of £2.7m.

Brendan Barber, the TUC's general secretary, said: "Top directors have used tough business conditions to impose real wage cuts, which have hit people's living standards and the wider economy, but have shown no such restraint with their own pay."

"When you think the average pay is going up 1% or 2%, it's not even meeting price rises. These pay packages have become so complex that executives don't even understand it themselves." Deborah Hargreaves, chair of the High Pay Commission, told BBC.

At a time when company share prices and profits have fallen, what explains such extravagant rewards? Pay is set by remuneration committees, who are supposedly bound to guard the shareholder interest. But in practice the committees are dominated by a closed circle of former managers, who can ignore shareholder votes. Deborah Hargreavesnoted on the Today programme: "remuneration committees on companies are often made up of other executives from other companies with an interest in keeping pay high."

According to the IDS, Mick Davis who heads Xstrata was the highest paid executive in the FTSE 100. The mining giant extracts metals, exports coal and harvests wood in locations from Chile to Australia. Davis was paid £18,426,105.

Bart Becht retired as the chief executive of Reckitt Benckiser in April after 16 years at the company. With a total pay packet of £17,879,000, he was the second highest paid executive on the list.

ICAP boss Michael Spencer made £13,419,619 according to IDS.

In fourth place was the former Tesco boss Terry Leahy, who was paid £12,038,303. He retired in March.

Tom Albanese has been at the helm of the mining group Rio Tinto for four years. According to IDS, he was paid £11,623,162, ranking him fifth highest paid executive in Britain's top 100 companies.


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