by Cary Gee
Concerns that an economic downturn, exacerbated by the Northern Rock crisis and a meltdown in the banking centre could lead to massive pay-offs being made available to sacked executives, have prompted shareholders to re-examine the packages on offer. Rules on executive pay were originally drawn up in 2002 by the association of British Insurers and the National Association of Pension Funds, whose members own 40 per cent of the stock market.
Since then, the average annual pay for the chief executive of a FTSE 100 company has rocketed to an astonishing £3.2 million.
Given the extraordinary rise in basic salaries, put-upon investors are insisting that severance packages should be restricted to pay only, a move that would see an end to lucrative bonuses and share options of the kind paid to the chief executives of US banking giants Citicorp and Merrill Lynch, who were forced to quit after presiding over multi-billion pound write-offs.
Merrill’’s Stan O’Neal is expected to receive more than £100 million while Citigroups Chuck Prince will receive stock options of between £15 million and
£30 million depending on who you believe, plus an office, a secretary and a car for the next five years. Some will of course wonder why he needs an office and a secretary when he no longer has a job. The TUC believes this is because Britain’s top directors “live on planet super-richâ€.
“They say they need the incentives. Yet if they really believed in incentives they would be joining the unions in condemning the cuts in real take home pay that have been imposed on millions of workers across the public sector.â€
To combat the “morally offensive†amounts of money on offer the TUC would like to see remuneration committees include workforce representatives. “If top directors are going to get packages far in excess of those they employ, let them get their consent before the cheques are signed.â€
