Chief executives have enjoyed a “bonus boom” over the past year despite the UK’s sluggish economic performance, new figures suggest.
Total (NYSE: TOT - news) pay for chief executives rose by 15.8pc over the last 12 months largely due to bonuses to £215,879 on average, the analysis showed. Stripping out bonuses, chief executive pay rose by just 1.8pc, the study of 43,000 middle managers in 180 organisations showed.
The report showed chief executives’ total pay increased five times as much as that of middle managers, whose pay including bonuses grew by just 3pc to reach £43,456 on average.
Ann Francke, chief executive of the Chartered Management Institute, which published the report, said: “It’s hard to believe that company directors and CEOs have seen such a big leap in bonus payments when the UK’s economic performance remains so sluggish. If organisations aren’t performing, leaders shouldn’t get these bumper rewards, especially when pay increases for all other management levels have been so much smaller.”
The National Management Salary Survey by the CMI, now in its 40th year, claims the gap between chief executive salaries and middle managers has widened over the last four decades.
In 1973, chief executives earned £10,600 on average, the equivalent of £166,000 in today’s money, while middle managers earned £3,855, the equivalent of £60,300.
The CMI report shows middle managers today earn £43,456, a 28pc drop over the 40-year period, compared to chief executives’ 30pc rise.
The survey also reveals two thirds of employers last year struggled to find managers with the right skills as recruitment woes continued. In brighter news, redundancies are down 1pc on last year.
Bank boss returns pay
The head of one of Austria’s biggest banks has returned €2m of his total pay because he believes executives can “sometimes be paid too much.”
Herbert Stepic, the chief executive of Raiffeisen Bank, Austria’s second-largest lender, is giving back the amount because his total pay of €4.9m is “neither in accord with my own self-conception nor with the Raiffeisen banking group’s foundation of values”.
Mr Stepic said although his compensation was “market compliant” and “fair”, repaying some of it was an “acknowledgement that remunerations can also turn out to be too high.”
While several bank bosses have given up bonuses since the financial crisis, it is rare for a chief executive to return a portion of their pay.