Basic Salaries Up By 10 % For FTSE Despite Bad Economy
Economy | September 18, 2009 at 4:33 amIts not all pay cuts and job losses, the directors of FTSE actually saw a 10 % hike in their salaries last year according to Finance Markets. The FTSE 100 had suffered huge losses last year, yet that did not affect the pay hike for their directors. The FTSE companies had almost one third of their value depreciated economically, but the salaries of employees was always on the rise even in the lean period.
An annual survey conducted by guardian reports that the full and part time directors of the company shared about £1 billion between themselves. All this happens in the weakest of economic times. £791,000 is seen to be the average salary of the chief executive of a senior bluechip company. The salaries seem to include bonus amounts, transport allowance, children education allowance and dental care. All these and many more perks significantly increase the pay that an FTSE senior employee takes home every month.
The rise in the pay for the board level executives is seen to be more than twice the rate of inflation in the previous year. This also seems to be quite a unique situation for the company as most of the companies were lowering pays and slashing jobs to overcome recession.
According to Liberal Democrat Treasury spokesman, Vince Cable “The analysis shows the breathtaking cynicism involved in a lot of executive pay deals, which are unrelated to either personal or corporate performance and involve people who are very well off helping themselves to larger salaries when private sector wages in many companies are being cut.”
As we have seen a few days ago that CEO pays have very less to do with performance, it is once again established in the case of FTSE that the top officials get paid due to reasons other than performance.
According to Brendan Barber of TUC “The recession has done nothing to stop the gap between top directors and the 
rest of their staff getting wider every year. It is even more offensive when the Institute of Directors has called for spending cuts that would hit pensioners, the poor and low-paid public sector staff. We’ve already had the 1980s-style recession it looks depressingly like we are going back to 1980s greed-is-good politics, too”.
These reports don’t surprise or anger me any more. According to the The Corporate Library report that I’ve gone through a few days ago, CEO pays are very high and it’s very rare that a CEO gets such high pay for performance alone. Some get high pays as a part of company profits, while others get money for just sticking to the company. This is greatly angering to the middle and lower level works, who earn every dollar based on performance.
If you’ve been tracking CEO pay news updates, you might have noticed that according to the Blackstone Group CEO, Stephen Schwarzman was declared the highest paid CEO with a compensation of $702,440,573! This, it seems is the
returns on his investments in the company and is not based on performance.
When the top officials of a company are getting paid high salaries for reasons other than performance, will those in the lower ups want to put more effort into their performances? Will they not question the judgmental skills of their management and decision making bodies?
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Top officials pay hike for reasons other than performance has become common now
CEO Pay increase during recession is pretty enraging
Great information on this site which has given me a few ideas that I can check out.