Contrary to what you might be seeing in the news, bonus pay-outs for UK board members have significantly decreased.
A recent Hay Group survey of almost 12,000 senior executives found the median (mid-range) average boardroom director’s salary has stayed static in the twelve months to May 2009. Total cash paid, including base salary and bonus dipped by 10.1 per cent, with a third saying they had received no bonus at all.
Below-board executive pay reflected these reductions, although not quite so severely.
So, if Hay’s data is correct, why is it we are hearing about bankers trousering fat bonuses still? In a conversation with Hay Group director Jon Dymond, he suggested that media reports of soaraway remuneration packages are based on reports of 2007-2008 activities, when the recession had yet to bite.
Along with unemployment, pay reporting has a lag behind overall commercial performance. Consequently, public company directors’ pay packages are likely to move up only modestly in the next 12 months, being based on 2009 performance, so the survey concludes.
Dymond hazarded that pay packages will not surpass 2007 levels until 2012-2014.
He used this bleak outlook to highlight the trend that remuneration packages are similar for UK plc companies across the board and this practice is in need of a review.
He said: “No one’s really nailed down what it is people are being paid for. Directors in an extraction company, where millions are spent on projects that go on for years before a hope of a return are paid in much the same way as directors in retailing, where day-to-day decisions can have a massive impact on company performance.”
Dyson suggested there’s some scope for simplifying executive pay and for tying it into their specific activities, rather than being so closely connected to general top-line profit.
He said: “Executive pay doesn’t really take into account people’s achievements in the downturn, when the profits just aren’t there to be had.”
(Pic: robinvanourick cc2.0)
