One in four chief executives of the biggest listed UK companies has taken a pay cut due to the coronavirus crisis, according to new research.
Most of the 25 bosses who have slashed their salaries have reduced their pay and fees by 20%, the same percentage that furloughed workers are losing out on with the government’s scheme, according to a survey and analysis of FTSE 100 companies’ announcements by the High Pay Centre, shared with the PA News Agency.
Some CEOs are taking an even bigger hit in solidarity with their workers — the boss of pest control company Rentokil (RTO.L) has slashed his salary by 35%, and donated the rest of it to an employee fund.
Only one company has not announced plans to cut its top boss’s pay, despite sending staff home, and three others are paying shareholder dividends despite using the government’s furlough scheme.
Premier Inn owner Whitbread (WTB.L) said it plans to take government money to furlough workers but has not confirming that bosses will receive a reduced salary. However, the company said that its remuneration committee, which decides on executive pay, will discuss the issue later this month.
Primark-owner Associated British Foods has said it will furlough 30,000 staff, but has not announced any plans to slash its dividend.
EasyJet (EZJ.L) is furloughing around 7,500 workers, however has been criticised for paying out £174 million in dividends last month, despite the airline industry taking a severe hit from the coronavirus pandemic.
Auto Trader (AUTO.L) has also said it would furlough staff and has not yet confirmed that it will slash dividends. However, it has warned that shareholders might take a hit if the situation continues to worsen.
“No decision has yet been made regarding the final dividend for the 2020 financial year, although if the current environment persists then it is unlikely that one will be declared,” Auto Trader said in its most recent statement to shareholders.
Ten FTSE 100 companies intend to use the UK’s job retention scheme, which allows businesses to furlough staff with the government paying 80% of their wages. This figure is likely to grow, according to the High Pay Centre.
“With the economy facing great uncertainty, and people’s jobs and livelihoods, as well as a considerable amount of public money, now at stake, it’s vital that companies make savings. Very high pay for top earners, who can easily afford a pay cut while still maintaining a lifestyle beyond the wildest dreams of most people, is the obvious place to start,” said Luke Hildyard, director of the High Pay Centre.
“Our figures show that some companies are taking meaningful action in this respect by cancelling bonuses and incentive plans, or making donations to employee funds or the NHS. Too many, however, are making token gestures or doing nothing at all.”
Nine of the UK’s biggest listed companies have cancelled or suspended their dividends, but have not cut executive pay.
“As the country faces the long-term implications of this crisis, it is clear that we are going to have to achieve a much fairer balance between those at the top and everybody else in future,” Hildyard said.