(Bloomberg) -- Despite well-publicized cuts to executive pay in response to Covid-19, the bonus culture among British chief executives remains in fine health, according to a new study.
Although bosses at 36 companies in the benchmark FTSE 100 index have had their salaries cut during the pandemic, long-term incentive plans remain in place, the High Pay Centre and the CIPD, a professional body for human resources, said in a report on Wednesday.
The findings jar with a climate of surging unemployment and reduced pay, potential fuel for a simmering backlash against so-called fat-cat pay. Propped up by bonuses, which typically account for half of a CEO's pay, the median payout remained steady at 3.61 million pounds, ($4.7 million). That's 119 times greater than the median salary of a full-time worker.
“Very high CEO pay undermines the spirit of solidarity that many companies are trying to project,” said Luke Hildyard, director of the High Pay Centre think tank. “Multi-million pound pay awards worth over a hundred times the salary of a typical worker seems like an unnecessary extravagance during a period of such economic uncertainty.”
ITV Plc and Compass Group Plc are among the companies to announce pay cuts for their CEOs because of the coronavirus.
The current way of rewarding CEOs does not guarantee success and both companies and investors should look at other approaches, such as deferred shares or smaller, more immediate cash bonuses, Charles Cotton, senior pay and reward adviser for the CIPD, said in an email to Bloomberg.
“We're not convinced that such a wide ratio is appropriate,” Cotton said.
Though the number of female FTSE 100 CEOs has increased, their mean pay of 4.02 million pounds is still lower than what their male counterparts are getting. With no black CEOs, the racial imbalance is starker than the gender one, the report said.
©2020 Bloomberg L.P.
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