Directors' pay outstrips that of employees by almost three times as much as it did in 2000. Directors now earn 98 times more than full-time workers, compared with 39 times their pay in 2000, according to new research.
The latest boardroom pay survey by Incomes Data Services shows that the average total earnings of chief executives at the top 100 UK listed companies, the FTSE 100, are now £2.8 million a year. Chief executive salaries are £730,796 on average, while other benefits make up the difference.
The Directors' Pay Report analyses the salaries, annual bonus payments, incentive plans and benefits of more than 1,000 executive directors at the UK's top 350 listed companies. The survey shows a fast-growing pay gap between workers and directors.
The report found that directors at the top 350 UK listed companies saw salaries alone increase by 9.6%, while wage settlements on average have resulted in pay increases for workers of 3% on average.
The total remuneration is many times the salary of executives because it includes the notional gains which executives would earn from share options at current prices. Not all share options could be immediately cashed in at current prices.
The research shows that average FTSE 100 chief executive pay packages jumped by 43% in just one year. They have risen by 102% since 2000, a period during which average pay packets overall rose by just 29%. Five chief executives earned pay packets which exceeded £10 million.
"It is hard not to conclude that this further huge rise in executive pay is more about greed than performance," said Trades Union Congress general secretary Brendan Barber. "No one should now have any illusions that executive remuneration has been brought under control. Giving shareholders a vote on boardroom pay has failed to rein in excess, as remuneration committees have simply found new ways to keep pushing up pay."
"Oscar Wilde may not have had directors’ pay in mind when he said ‘moderation is a fatal thing … nothing succeeds like excess’, but given our latest survey it seems like remuneration committees have acted on his advice," said Steve Tatton, editor of the IDS Executive Compensation Review.
"The stratospheric levels of directors' pay compared to average wages mean that executives now live in a class apart, even from employees in their own companies. It is not just socially divisive, but bad for the economy," said Barber.