Salaries of British company bosses ‘defy gravity’

October 14th, 2008 - 6:47 pm ICT by IANS  

London, Oct 14 (IANS) Even as greedy unsupervised bankers and stockbrokers are blamed for the global financial crisis, a new report shows directors of the biggest British companies are pocketing record-breaking multi-million pound salaries.The average pay for leading executives in FTSE 100 companies reached a record high of 3.5 million pounds (Rs.298 million) in the past financial year, an increase of 11.5 percent over the previous year, according to a survey by the Incomes Data Services (IDS), an independent research group.

Five directors earned more than 10 million pounds (Rs.850 million) and the average salary for FTSE 250 top executives was almost 2.3 million pounds (Rs.196 million) - a rise of 10.4 percent over the previous year.

IDS director Steve Tatton said the salaries “defy gravity” and urged British remuneration committees to address anomalies in performance-linked bonuses in order to reflect good as well bad performance.

“There is now a focus on the City and on bankers’ pays, but remuneration committees also need to live up to the pay-for-performance promise,” Tatton told IANS.

“When performance deteriorates, are we seeing the salaries go down? If you look at company performance in terms of share price or pre-tax profits, often there is a very little co-relation with salaries.

“And when they don’t make the payouts, they tend to redesign the performance criteria.”

The report comes a day after three major British banks - Royal Bank of Scotland, Halifax Bank of Scotland and Lloyds TSB - were asked by the British finance minister to submit to strict new regulatory norms, including a freeze on bonuses this year.

There has been a growing call in both Britain and America for reining in bankers and stockbrokers who have been blamed for causing the current financial crisis by not only lending sub-prime mortgages but also driving down the share prices of banks by short-selling and spreading rumours.

Tatton said company directors were prospering while the economy was entering tougher times and more workers risked losing their jobs, warning “unless remuneration committees avoid making toxic pay decisions over the coming year, UK boardrooms may soon find the spotlight returning to their pay packages”.

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