Study: Pandemic pay cuts to have little effect on UK’s bonus culture

The City of London financial district can be seen in London March 9 2020. A total of 36 companies on the FTSE 100, the London Stock Exchange’s flagship index, have announced cuts in executive pay due to the economic crisis resulting from the pandemic, the annual report said. — Reuters pic
The City of London financial district can be seen in London March 9 2020. A total of 36 companies on the FTSE 100, the London Stock Exchange’s flagship index, have announced cuts in executive pay due to the economic crisis resulting from the pandemic, the annual report said. — Reuters pic

LONDON, Aug 5 — Pay cuts taken by British bosses during the pandemic will have little effect on the “bonus culture” causing wide inequalities within companies, according to a study published today.

A total of 36 companies on the FTSE 100, the London Stock Exchange’s flagship index, have announced cuts in executive pay due to the economic crisis resulting from the pandemic, the annual report said.

It is produced by the Chartered Institute of Personnel and Development (CIPD) and the independent think tank High Pay Centre.

But these measures are “superficial or short-term” and do not change the “bonus culture” which allows big bosses to earn huge sums in the variable part of their remuneration, they added.

None of the companies implementing the pay cuts have tackled the long-term incentive scheme, which generally makes up around half of executive pay, the analysis said.

“It doesn’t look like the pandemic has proven to be an inflection point for executive pay yet,” said Peter Cheese, Chief Executive of the CIPD.

“Pay among the FTSE 100 will probably fall next year, but this is more likely to be due to wider economic circumstances rather than a fundamental change in approach,” he added.  

A FTSE 100 company boss earned an average of £3.61 million (RM19.9 million) in 2019, 119 times higher than the median British salary of £30,353.

Six companies paid their bosses more than £10 million.

Tim Steiner, boss of online food retailer Ocado, was the top earner, raking in £58.7 million.

Frenchman Pascal Soriot earned £14.3 million as head of pharmaceutical group AstraZeneca while Ivan Menezes, head of the spirits group Diageo, earned £11.7 million.

The study called for more transparency in decision-making on salaries by taking greater account of environmental performance or by appointing an employee representative to remuneration committees.

British-based companies with more than 250 employees have been obliged since this year to disclose the salary gap between the CEO and the average employee.

And the country has for several years had a “say on pay” system in place, which gives shareholders the opportunity to express their views on executive pay, but without having any binding power. — AFP

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