PM voices concern at directors' pay
Prime Minister David Cameron has expressed concern after research showed directors at the country's top firms have seen their pay rise by 49% in the past year.
Despite rising unemployment and falling standards of living for most of the population, average earnings for FTSE 100 directors have risen to just under £2.7 million, according to Incomes Data Services (IDS).
Mr Cameron said: "This is a concerning report, particularly at a time when household budgets are very tight and people have difficult circumstances."
He called for "transparency, accountability, responsibility" in boardroom pay, urging that all awards must be justifiable. Boards have got to think when they are making pay awards, is this the responsible thing to do?
"Of course you have got to attract the best talent to run the business that you are accountable for as a non-executive director, but is what you are doing responsible?"
The research showed that directors' 49% increase in remuneration - including salary, benefits and bonuses - was higher than the 43% jump in the pay of chief executives. Average bonus payments for directors increased by 23% from £737,000 in 2010 to £906,000 this year, the report said.
The pay of FTSE 100 chief executives rose by 43% in the last financial year to an average of £3.8 million, while finance directors enjoyed a 34% increase to take their average earnings over the £2 million mark, according to the report.
Mr Cameron added: "Everyone, whether they are in public life, whether they are in private enterprise, they all need to be able to justify the decisions they make about pay. So I welcome the debate about this. I welcome the transparency. I want to see proper action and I believe in a responsible society and that is responsibility exercised by everybody including in the board room."
Deputy Prime Minister Nick Clegg said it "can't be right" that some company bosses were given "socking great big pay increases" when their firm's performance had actually plummeted, adding: "That culture of reward for failure must change."
Labour leader Ed Miliband said: "People are not against those at the top getting higher rewards if those rewards are earned, if more wealth is created, if more jobs are created. But when people are struggling, when the middle is being squeezed, when people are seeing their living standards fall, it is not fair for those at the top to get runaway rewards not related to the wealth they have created."