‘New economy’ firm bosses have seen their pay shoot up over the last year, thanks to huge rises in the value of their company shares.
This is the verdict of a new survey carried out by Inbucon for The Guardian newspaper, which is based on information contained in the latest annual reports of companies in the FTSE 100.
The ranking of top bosses pay reflects the ability of directors in ‘new economy’ technology-based firms to benefit from their share options – top of the list is Vodafone’s director Arun Sarin, who took home £21.2m last year, followed by another Vodafone director, Mohan Gyani, who earned £16.2m and Paul Chisholm of Colt Telecom, with £15.2m. Software house Sage saw its chief executive take home more than £6.5m. Executives working for ‘old economy’ companies also faired well, however – the survey shows that Luc Vandevelde, the new chairman of Marks & Spencer, received £2m for one month’s work, thanks to a “golden hello” from the group.
The survey reflects an average 16.5 per cent rise in board directors’ basic salaries is around four times the average salary rise for company employees last year, despite the increasing proportion of reward being paid in the form of shares. The Guardian says that Peter Giller, the chief executive of International Power, will be paid entirely in shares when the company demerges, giving him a possible haul of £9m of shares in three years.
Not unexpectedly, the survey results have been greeted with some despair by unions and other commentators. Dave Prentis, leader of public service union Unison, told the Guardian: “How much longer can fat cat bosses justify these huge pay and perks while millions of workers are denied a decent living wage?” He went on to demand employee representation on remuneration committees, in order that they be asked to justify their decisions. Although the government has stated its intention to force companies to link pay to performance, unions questioned by the paper said that they felt it had failed to do this. Trade and Industry Secretary Stephen Byers is reported to be planning a statement on the issue in the coming weeks.
