Less than half of top UK firms cut exec pay due to Covid: study
Money

Less than half of top UK firms cut exec pay due to Covid: study

Fewer than half of Britain’s biggest companies cut their top executives’ pay despite the economic shock of the pandemic, the High Pay Centre said in a report published Tuesday.

The think-tank examined 216 companies’ stock market statements between March and May 2020, when Britain went into lockdown and the government was forced to step in with a Covid support package for affected workers.

The London-based High Pay Centre revealed that only 104 companies took at least one measure to cut executive pay, while 78 cut base salaries or cancelled pay rises.

Among those firms that reduced pay, the most common action was a cut of between 10-20 percent of base salaries and this was taken by 50 firms.

Eleven firms chose to reduce salaries by between 50 and 100 percent, according to the report.

Executive pay has long been a thorny issue in Britain, with so-called “fat cat” bonuses for city high-fliers regularly exposed in the media.

However, with Britain currently in the grip of a cost-of-living crisis sparked by soaring food and energy costs, it has returned to the fore.

Recent data showed that average wages are sinking in real terms as pay struggles to keep pace with runaway inflation.

The Resolution Foundation, an independent think-tank which aims to improve living standards for low- and middle-income earners, said half of British workers suffered pay cuts until late 2020.

However, in the same year, the average FTSE-100 chief executive was paid £2.69 million ($3.72 million, 3.44 million euros) — 86 times that of the average full-time worker.

In 2019, the figure was even higher at £3.25 million.

“Dependency on support from public money, wider hardship experienced by workers losing their jobs, and of course the huge public health emergency created a potential moral issue around the appropriateness of very high executive pay,” added the High Pay Centre report.

Director Luke Hildyard said the research suggested willingness to cut executive pay “could be more commonplace at companies with diverse perspectives and life experiences in the boardroom, and with a higher degree of institutional ownership”.

The report added: “For most companies, staff costs will be amongst their biggest (if not their single biggest) expenses.

“Top earners represent a disproportionately large element of those costs, and many executives and senior managers already enjoy significant personal wealth and can therefore afford to sacrifice further earnings without compromising their lifestyle.” — Agence France-Presse

 

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