Pay gap widens as fat-cats continue to line their wallets


The pay gap between boardroom executives and employees is continuing to widen.

In the year to 30 June 2004, the average total earnings received by directors of the UK’s 350 leading firms rose by 16.1 per cent, according to Income Data Services’ (IDS) Directors’ Pay Report 2004.

Yet the report shows the average total earnings of all employees increased by only 4.3 per cent over the 12 months.

The IDS survey found that the directors of FTSE 350 companies today have an average salary of £213 for every £100 of wages paid to them in 1998. By contrast, managers and professionals are getting £127 for every £100 of salary they earned in 1998.

The widening pay gap comes despite a number of high-profile campaigns in recent years against ‘fat-cat’ pay and successful shareholder rebellions that have seen leading firms such as Tesco and GlaxoSmithKline reduce payouts to their top directors.

Financial experts have urged HR to play a more active role in deciding executive pay to prevent accusations over fat-cat pay settlements (Personnel Today, 5 October).

Look out for Personnel Today’s new One Stop Guide to Managing Reward available next week. It tackles how to develop pay programmes that support and reinforce business objectives For a copy, see call 01371 810433 or email personneltoday@esco.co.uk.

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