The pay gap between boardroom and shopfloor in the UK has grown six times wider over the past ten years and is still surging ahead, according to figures released today.
Over the past decade the average earnings for British employees as a whole have grown by just over 45 per cent. In the same period the average earnings of lead executives of FTSE 100 companies have gone up by 288 per cent, rising more than six times as fast.
Pay analysts Income Data Services (IDS) looked at the salaries, annual bonus payments, long-term incentive plans and benefits of some 1,800 executive directors in Britain's top 350 listed companies, based on financial years ending in the 12 months to 30 June 2003.
Taking all FTSE 350 directors together, salaries went up in the latest 12-month period by 9.2 per cent on average, while total cash increased still faster by an average 12.9 per cent.
This is more than three times the rate of inflation and the rate of increase of average earnings.
However the figures also show wide variations in remuneration. While 14 per cent of lead executives received no salary increase at all over the past year, one-in-ten received a salary rise of in excess of 20 per cent.
According to the IDS, 62 per cent of lead directors of FTSE 100 companies received total earnings of more than £1 million.
The figures will provide further ammunition to those calling Last week, the Association of Chartered Certified Accountants (ACCA) urged that companies should be required to declare what their chief executives receive as a multiple of the pay of an average employee.
“Board members themselves must start displaying more sensitivity to the relative balance of their pay and others in their company,” it said.
The ACCA says that the bosses of FTSE 100 companies are typically paid 80 times as much as the average worker.
Figures collated for The Observer newspaper by Payfinder have found that the boss of Rentokil earns the largest multiple of an average employee’s salary.
At £2.9 million, Rentokil’s chairman’s earns 247 times the £11,696 earned by its average employee.
Other firms with a large pay gap include catering group Compass, betting group William Hill and supermarket giant Tesco. The average Tesco worker earns £13,598, 181 times less than its chief executive.
IDS says that the new Government requirements on disclosure of directors' remuneration have produced some improvements in reporting by comparison with earlier years.
"The main effect has been to bring those companies that previously provided only minimal information up to the disclosure standard that was, on the whole, already being met by the large majority of firms," the report says.
But the excesses in UK boardrooms pale in comparison to the avarice that has become the norm in the USA. The remuneration of American chief executives increased by an average of 15 per cent in 2002, making their packages worth more than 200 times the average salary.
Since companies always seek to justify their executive pay structures by pointing to "the realities of the modern market for company leaders", we can only presume that British bosses intend to pay themselves still more in future until they achieve parity with their colleagues across the Atlantic.