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.
