Income Data Services’ contention that FTSE100 executive directors have received 55% pay rises is a misrepresentation (Austerity Britain?, 29 October). Yes, boardroom pay has gone up over the last 12 months, but a 55% increase overstates the situation. The figure in the IDS survey is an average, skewed by a small number of large increases in high-performing companies. The median – a far more representative number – is less than half of this, at 23%. In addition, the methodology used by IDS to value “pay” allows for share price movements, including paper gains on share options that may yet be reversed. As such, part of the reported “pay increase” is merely the consequence of paying in shares – an approach endorsed by shareholders, governments, and regulators around the world.
The real concern must be the significant increases in annual bonuses, which were not, in general, underpinned by improvements to corporate earnings. While one-year profit is not – and should not be – the only factor driving bonuses, last year’s payments risk reinforcing the public perception that performance-related pay is all upside and no downside. No sensible observer would deny there are legitimate shareholder and public concerns about executive pay. But reporting an exaggerated and misleading increase does little to advance the debate.
Head of executive reward, Hay Group UK
• Could the Guardian reconsider its use of the term “earned”, as in “Bart Becht, chief executive of Reckitt Benckiser, earned £92.6m last year”? Got, grabbed or guzzled would seem to be more appropriate.
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