Prime Minister David Cameron said he’ll set out plans in the coming days to restrain pay at the top of British companies and in banks, saying rewards are “completely out of whack” with performance.
Cameron said today he plans to use “the tools at our disposal” to force more corporate transparency over pay and to give shareholders more power to limit compensation. He said he wanted the trend over recent years of smaller bank bonuses to continue.
With his government’s austerity plans hitting public-sector workers and welfare recipients this year, the prime minister’s Jan. 2 New Year’s message contained a pledge to deal with “excess” at the top of the income scale. He said both policies were about “responsibility.”
“People aren’t satisfied, I’m not satisfied,” Cameron told BBC Radio 4’s “Today” show. “We’ve seen a level of reward at the top which hasn’t been commensurate with success.”
The pledges on pay, which Cameron may flesh out in media interviews over the weekend, are an enactment of ideas floated by Liberal Democrat Business Secretary Vince Cable in September.
Cable referred to a study by the High Pay Commission, a pressure group that pushes for curbs on top earners, which found British directors’ salaries increased by 64 percent over the past decade, while the average year-end share price of companies in the benchmark FTSE 100 Index declined by 71 percent. The average annual bonus for directors rose 187 percent, according to the commission.
When it issued its final report in November, the panel said the soaring earnings of top bankers are having a “corrosive” effect on the U.K. economy. It noted that the then chief executive officer of Barclays Plc, John Varley, was awarded 4.4 million pounds ($6.8 million) in 2010, 169 times that of the average worker in the U.K. and 4,899 percent more than his predecessor earned in 1980, when the Barclays boss earned 13 times more than the average worker.
In October, Incomes Data Services said directors of the largest British companies saw their earnings jump by 49 percent in the last financial year to an average of 2.7 million pounds, driven by bonuses and long-term incentive awards.
The FTSE 100 rose 4 percent in the 12 months through March last year and fell 5.6 percent during 2011 as a whole. Average earnings in the economy as a whole rose 2 percent in October from a year earlier to 24,128 pounds.
‘If They’re Succeeding’
“I’m all for people being well-paid if they’re succeeding,” Cameron said today.
The opposition Labour Party accused the premier of constantly talking about capping pay, yet failing to act.
“The prime minister claims to recognize the importance of responsibility at the top as well as the bottom of society but he has been in power for 20 months and failed to act on excess in the boardroom and in the City,” London’s financial district, Labour’s business spokesman, Chuka Umunna, said in an e-mailed statement. He said budget measures announced by Chancellor of the Exchequer George Osborne in November “take three times as much from families with children as they do from the banks.”
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