HPC reveals top Lloyds and Barclays staff earn 75 times ave salary

Tuesday, 22 November 2011 12:13

A new report has revealed the disparity in wages between average worker in the UK and executives at top companies.

The High Pay Commission's (HPC) Cheques With Balances: Why Tackling High Pay Is In The National Interest report draws on a year-long enquiry into salaries and provides evidence that inequality is damaging the economy.

The report says that pay for top FTSE executives should take the form of a basic salary plus a single performance element. The report says that complex remuneration packages for top earners are damaging relationships with shareholders.

The Commission has shed light on the hugely wide pay ratios between top earners and the companies median average.

HPC chair Deborah Hargreaves said: There is a crisis at the top of British business and it is deeply corrosive to our society."

As an example, in 1980 the top earners at Barclays were paid no more than 13 times the average salary of other employees. However, in 2010, John Varley, Barclays top executive was paid £4.36 million, 169 times the median salary.

An editorial in the Financial Times today said: "Four out of five people now think pay and bonuses for top executives are now out of control."

It concluded that, "If shareholders could exert pressure on pay, as on all other costs, it would also help British businesses build trust with a wary public."

It found that some executives' pay has increased by 4,000 per cent in three decades, with top wages at Barclays and Lloyds now 75 times the national average.

BP was also found to be paying disproportionately high salaries, with its most senior staff taking home 63 times the average.

HPC warned that excessive pay creates the impression that business leaders are lining their own pockets at a time when many people are struggling financially with pay freezes.

It also said it had found some companies to be concealing large salaries within the small print of annual reports and remuneration arrangements, further damaging trust.

"We believe it is time to act to build transparency, accountability and fairness into remuneration for senior executives in the UK ... when the gap between the 'haves and have nots' becomes so large, it does not encourage aspiration or cohesion, but disengagement and social unrest," the report said.

It went on to outline recommendations such as paying only basic salaries to executives and publishing pay packages to avoid the pay gap increasing.

HPC chair Deborah Hargreaves said: "When pay for senior executives is set behind closed doors, does not reflect company success and is fuelling massive inequality it represents a deep malaise at the very top of our society."

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