Could you survive on pay of £4.5 million a year?

The economic recession has resulted in falling real incomes for most UK households. We are told that we are all in this together – but is that true? How are our most senior executives fairing in these troubled times?

According to a study commissioned by the High Pay Commission, leaders of Britain’s top 100 companies saw their pay packages jump by an average of £1.3m to almost £4.5m last year, the biggest leap in nine years,. The average pay deal for a FTSE 100 chief executive soared from £3.09m to £4.45m last year as business leaders were able to enjoy record windfalls from share-based incentive schemes, thanks to a sharp bounce in the stock market.

The study also reveals that:

  • In 2002, for on-target performance, FTSE 100 lead executives received a bonus worth 48% of salary. In 2010, for the same level of performance, a FTSE 100 lead executive’s bonus was worth 90% of salary.
  • The increase in bonuses has not come at the expense of absolute rises in salary with salaries increasing 63.9% over the last 10 years.
  • In 2002, the median maximum grant of shares that a FTSE 100 lead executive could be awarded was 100% of salary. In 2010, this has risen to 200% of salary.
  • The average value of Long Term Incentive Plan (LTIP) awards paid out to lead executives across the FTSE 350 has gone up over 700% since 2000.

You can read the full report here.


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