Executive pay levels decided by an out-of-touch, overpaid elite, says TUC

26 February 2015

Executive pay levels are being decided by an overpaid elite who are desperately out-of-touch with ordinary workers, says the TUC based on analysis published today (Thursday).

The TUC’s report A Culture of Excess finds that FTSE 100 remuneration committee members were paid on average £441,383, which is 16 times more than the average worker’s earnings. Furthermore, the highest paid committee member was paid over £9m, a staggering 339 times more than average earnings.

Executive pay in listed companies is set by a remuneration committee drawn from a narrow constituency, consisting mainly of board members of other companies. The report looks at remuneration committee members’ earnings from all their positions on different company boards, including their remuneration committee membership.

The TUC report finds that:

• Nearly two thirds of remuneration committee members (64 per cent) held at least one additional board position on another company. The majority of these were non-executive director positions on other company boards.
• 33 people were members of more than one FTSE 100 remuneration committee during 2014.
• Two-thirds of FTSE 100 companies shared one member of their remuneration committee with another FTSE 100 remuneration committee.
• Over a third of FTSE 100 companies have an executive director from another company on their remuneration committee.

A Culture of Excess recommends that remuneration committee membership should be broadened out to include company workers. This would bring a wider perspective to the issue of executive pay and it would help companies take pay and conditions of other company workers into account in their decisions on executive pay – as they are required to do by the UK Corporate Governance Code.

Since the financial crisis there has been widespread public concern about the growing gap between executive pay and the pay of ordinary employees. Company directors have seen their pay increase, whilst regular workers have suffered the longest real wage squeeze since Victorian times.

TUC General Secretary Frances O’Grady said: “The excessive earnings of remuneration committee members demonstrate just how far removed they are from the rest of Britain – especially as in most cases it does not even amount to full-time work.

“Ordinary workers need to be included on committees to add some common sense and reality to boardroom pay decisions. It should not be a closed shop for an elite who are only interested in looking after their own.”

NOTES TO EDITORS:

FTSE 100 Remuneration committee members –  breakdown of remuneration, including from other directorships. All figures are averages (mean)

- The full TUC report A Culture of Excess is available here: https://www.tuc.org.uk/sites/default/files/Acultureofexcesspay.pdf

- Median annual earnings for full-time employees is £27,200, Annual Survey of Hours and Earnings, November 2014 http://www.ons.gov.uk/ons/rel/ashe/annual-survey-of-hours-and-earnings/2014-provisional-results/stb-ashe-statistical-bulletin-2014.html

- The TUC is organising Fair Pay Fortnight 2015 between Monday 16 February and Sunday 1 March. The Fortnight is part of the TUC’s Britain Needs a Pay Rise campaign and will feature a series of events across England and Wales to raise awareness about low pay, pay inequality and the need for higher pay settlements in the public and private sector. For more information please visit www.fairpayfortnight.org

- All TUC press releases can be found at www.tuc.org.uk

- Follow the TUC on Twitter: @tucnews
 

Contacts:

Media enquiries:

Clare Santry  T: 020 7467 1372  M: 07717 531150  E: csantry@tuc.org.uk
Tim Nichols  T: 020 7467 1337  M: 07876 452902  E: tnichols@tuc.org.uk
Alex Rossiter  T: 020 7467 1285  M: 07887 572130  E: arossiter@tuc.org.uk