Out-Law News 1 min. read

Executive pay still too secretive, says TUC


Details of top executive pay packets are still kept secret, despite claims to the contrary from the Government. That is the angry message from the Trades Union Congress (TUC) today, announcing its push for greater disclosure of executive excess.

Trade and Industry Secretary Patricia Hewitt upset the TUC yesterday when she welcomed the "positive impact" of recent rules on pay disclosure. The Directors' Remuneration Report Regulations require quoted companies to publish a directors' remuneration report for each financial year. The rules took effect on companies' financial years ending on or after 31st December 2002.

Citing research by Deloitte and Touche, Hewitt said that the Regulations had improved the dialogue between companies and shareholders to such an extent that the Government has decided against new provisions on directors' pay in the forthcoming Company Law Reform Bill.

In particular, the research found that companies were changing their remuneration policies and practices to reflect links between pay and performance.

But the findings were not enough to satisfy the TUC.

"Whilst shareholder votes at AGMs have had an influence in limiting top bosses' pay in some companies, massive bonuses, huge rewards for failure and gold-plated pension schemes are still safe behind the closed doors of many British boardrooms," said TUC General Secretary Brendan Barber.

"Top directors still award themselves pay rises many times those given to staff and continue to give themselves VIP pensions at a time when many employees are seeing their schemes close," he added. "We will continue to push for companies to be forced to reveal the extent of pay and pensions across the workforce so that the true extent of executive excess can be seen."

In fact, the true extent of executive excess in the UK is dwarfed by boardrooms in the US. According to a UK study by KPMG, the average pay packet of a FTSE 100 CEO was £1.5 million in 2003. The same year, the average CEO of a large company in the US received $9.2 million – almost £5 million, according to compensation analysts Pearl Meyer & Partners.

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