A major study has shown average total pay among FTSE 100 chief executives has grown thirteenfold from £300,000 in 1987 to £4m today, after adjusting for inflation, according to the Telegraph.
Pay is a ticking “time bomb” with “opaque” links between remuneration and performance, the report warned. It added that the culture among executives is unlikely to change.
Ordinary workers will face a squeeze on their incomes for years due to the financial crisis, while executives will continue to enjoy lucrative deals “because it’s in no one’s interests to change”, the report by the University of Exeter Business School suggested.
The government is currently increasing its efforts to tackle excessive pay amid growing concern from shareholders and the public that rewards are spiralling out of control and have little to do with performance.
Ministers will unveil new proposals to curb unjustified pay in January, which could involve new legislation.
The study is based on a series of interviews with directors of large UK- listed companies, such as Lloyds Banking Group, Marks & Spencer and Prudential.
Executives told researchers long-term incentive plans that are designed to influence behaviour are effectively meaningless, because they get put in the bottom drawer for three years and qualify as “an expensive lottery ticket”, based on a “set and forget” principle.
In addition, some executives felt pay got too much attention, the report said.
