Bosses' earnings 'defied gravity'
Updated on 14 October 2008
The scale of top directors' earnings in recent months "defied gravity", with increases still running into double figures, according to a new report.
Average pay for lead executives in the FTSE 100 companies reached a record high of £3.5 million in the last financial year, an increase of 11.5% on the previous year, a study found.
Incomes Data Services (IDS) said top executives in the 250 firms below the FTSE averaged over £1.5 million, a 10.4% increase and also a record.
The report said directors were prospering while the economy was entering tougher times and more workers risked losing their jobs.
Chief executives in top finance firms received average earnings of almost £3.5 million last year, while their FTSE 250 colleagues received almost £2.3 million. Virtually all incentive payments to top bosses were running at higher levels than the previous year, the research found.
Five directors earned more than £10 million, although there were signs that some companies were already preparing for a downturn in the economy by making changes to their incentive plans, said the report.
Steve Tatton of IDS said: "Greedy City bankers rather than fat cat directors may be currently attracting all the adverse comment, but unless remuneration committees avoid making toxic pay decisions over the coming year UK boardrooms may soon find the spotlight returning to their pay packages.
"If there is ever a time for the pay-for-performance culture that has gripped UK boardrooms in the past decade to live up to its promise it is when the UK economy enters stormy weather.
"The proof of the pudding will be in the eating when large numbers of directors do not receive any incentive payments as a result of deteriorating corporate performance."
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