Last week the 2010 FTSE 100 Directors’ Remuneration report from Hewitt New Bridge Street was published and it shows that bonuses have increased.
The annual report shows the median total remuneration for the highest paid director in the FTSE 100 is just under £3 million, compared to £2.5 million last year.
Bonuses earned for the highest paid directors in 2009/10 were around 120% of salary, compared to around 90% last year, or around 75% of the maximum potential, 60% last year.
Over a third of FTSE 100 organisations have also frozen salary levels this year, compared to 60% last year. The report shows that where salary increases have been made, the most common rate of increase is broadly in line with inflation.
Rob Burdett, a principal consultant at Hewitt New Bridge Street, gives the explanation “The widespread salary freeze imposed in 2009 has thawed to a degree, the days of almost automatic year-on-year above inflationary salary increases for executives are numbered.
“Also, risk and greater transparency over executive pay have been embraced by many remuneration committees. However, bonuses paid this year have reached record levels, driven by the unexpected rate of improvement in economic conditions during the year.
“These bonus levels have not been paid due to companies purposely setting soft targets. In fact, our experience suggested that when these targets were set in early 2009 they were actually set to be tougher relative to budgets, in order to take account of possible reduced profits. "
When you read explanations you like this, you have to wonder what you are reading.
With an economy being kept afloat by record low interest rates, are we really living in a time where the economy is booming?
The search for the truth may involve the realistion that Company Directors are achieving high bonuses because they can get away with it. Before we get too moral about this, we can perhaps face up to the fact that greed is a fundamental aspect of the human condition and always will be.
Justin Patten, Employment Trainer