06 September 2016
Executive pay rose again last year, despite growing anger among shareholders, a new analysis has revealed.
Deloitte has reported that executive salaries increased by 2% and the average bonus remained at 150% of salary, with actual payouts rising to 77% of the maximum potential compared with 73% last year.
This is despite the fact angry shareholders are revolting against renumeration packages, with the number of FTSE 100 companies receiving at least 95% support for executive pay dropping to 26% compared with 52% last year.
But Stephen Cahill, a Partner in Deloitte’s Renumeration Team, pointed out that despite their rising disapproval, shareholders are not keeping businesses to account.
“Shareholders have had the power for over ten years to stop companies from implementing arrangements which they are uncomfortable with. They have, to a large extent, failed to use it yet continue to complain about the problems,” he said.
Indeed, shareholder accountability is one of the many myths the Institute of Employment Rights highlighted in its recent publication the Mythology of Business.
Author David Whyte, Professor Sociology at the University of Liverpool, wrote:
“The principle attempt by the last government to curb corporate power was the introduction of a series of measures that boost the ‘democratic’ power of shareholders … yet recent experience tells us that there is little reason to be optimistic about this prospect.”
He explained: “By May 2012, executive pay reports had been rejected by shareholders at four UK-quoted companies (Aviva, Pendragon, Central Rand Gold,and Cairn Energy) and three executives had resigned over opposition to pay reports.
“In fact, there is very little evidence that this shareholders’ rebellion against executive pay had any impact at all. The pay received by the average FTSE 100 chief executive increased by 15% between 2012 and 2013,the year of the so-called shareholder spring.”
The Institute of Employment Rights has proposed 25 policy proposals to reverse the growing wage inequality in the UK (which is currently higher that in any other European country). We recommend that the government refocus its attentions on strengthening workers’ voices within businesses by encouraging collective bargaining structures whereby wages can be negotiated per sector, and per enterprise, to ensure the richest do not provide themselves with obscene pay rises while slashing the pay and conditions of their workers.
Read more and purchase your copy of the Mythology of Business to understand how politicians propagate myths to perpetuate neoliberalism
Read more and purchase your copy of the Manifesto for Labour Law – our proposals for the next Labour Government