Rob Starr, Big4.com
Times are tough all over for everyone. And when you read a Deloitte report that says over half the FTSE 350 companies will not increase the pay for their executives, you know that the pinch is being felt everywhere.
Deloitte UK’s annual remuneration report noted the corporate belt tightening and that this would translate into a two year pay freeze adding to the fact that more than 75% of execs weren’t given a pay raise in 2009. Sure there are some people who aren’t terrible moved by these numbers and feel that the downsizing of the American (or for that matter, the UK) Dream should start right at the top, but those kinds of numbers always have a trickle down effect. And in this case, it mirrors the awful state the global economy is really in.
Stephen Cahill, partner in Deloitte’s remuneration team says recently no one was sure whether the freezes that came about last year were just a one time event or the shape of things to come at first. Now it appears that these are changes that are permanent and that “years of executive salaries increasing at rates far in excess of inflation and the increase in average earnings are, at least for the moment, well and truly over.”
Senior UK executives saw their pay increase 5% since 2008, even though the performance of the economy went into a tailspin. However, while it is important to remember here that not all business executives were responsible for the sub-prime mortgage fiasco that has effectively smashed the world’s economy. But it’s sort of good to know that they are living in the same world as the rest of us who are feeling the ill effects of corporate greed.
Even the executives that were to get raises could only expect about 3%, which is much lower than in other years. But executive comp is not an easy thing to quickly change. As Stephen Cahill concludes, “Our research suggests executive remuneration is undergoing a degree of change but as yet the jury is still out as to whether this will result in a complete transformation.” (blog)