Bosses’ bonuses have soared, says report

Research for the High Pay Commission, which is studying wage rates, found that the average annual bonus for a director in a FTSE 100 firm increased by 187 per cent.

Lead executives received a bonus worth 48 per cent of salary in 2002 but last year, for the same level of performance, it had jumped to 90 per cent, the report said.

At the same time, their salaries increased by 63 per cent, said the commission, which is due to report its full findings in November.

The average value of long-term incentive plan awards paid out to top executives across the FTSE 350 had shot up by 700 per cent since 2000, the report said.

The average total earnings of directors in state-supported banks were just under £4 million last year, compared with £1.7m in 2000, an increase of 130 per cent, it was found.

Deborah Hargreaves, chairman of the High Pay Commission, said: “The evidence exposes the myth that big bonuses and high salaries result in better company performances.

“There has been massive growth in what has been termed as performance-related pay yet no such corresponding leap forward in company performance.

“All we’ve seen is things getting much more complicated - in many ways, masking the real value of what executives get paid.

“Corporate governance reforms attempting to link pay with performance appear to have done little more than add to the huge complexity of executive packages, reward schemes and bonuses that make up the pay of FTSE 100 directors.”

TUC general secretary Brendan Barber said: “Runaway pay at the top is not just unfair but helped cause the crash. Ordinary people were sold credit as their wages failed to keep up.

“What makes it worse is that those who did the best from the boom years still refuse to make a proper contribution to putting right the damage they caused while those who did the least to cause the crash are paying the heaviest price.

“Reducing the gap between the super-rich and the rest of us through fairer pay must be a crucial part of building the new economy we need to replace the broken model that gave us the worst crash in generations.”

A spokesman for the Department for Business, Innovation and Skills said: “This is an interesting report, which we will study further as part of our wider look into corporate governance.”

Bob Crow, leader of the Rail Maritime and Transport union, said: “These massive increases in top bosses’ pay and bonuses over the past decade show that it’s one rule in the boardroom and another on the shop floor.

“Those who demand pay restraint from the workforce have been caught out filling their boots.”