One in four top bosses cuts pay in face of Covid-19 crisis
One in four of the biggest companies listed in London has slashed the amount of money paid to chief executives in the face of the coronavirus crisis, according to new research.
However, one company has not announced plans to slash its boss’s pay, despite sending staff home, and three others are paying shareholder dividends despite using the Government’s furlough scheme.
Most bosses at the 25 companies who have cut pay have reduced their salaries and fees by 20%, the same proportion that furloughed workers are forfeiting.
However, some have gone further, according to a survey and analysis of FTSE 100 companies’ announcements by the High Pay Centre, shared with the PA News Agency.
The chief executive of Rentokil has slashed his salary by 35%, and donated the rest of it to an employee fund.
Ten companies intend to take advantage of the UK’s job retention scheme, which allows businesses to furlough staff with 80% of their salaries covered by the Government. This figure is likely to grow.
Only Whitbread has announced plans to take Government money to furlough workers without confirming that bosses will take a pay cut. However, the company, which owns Premier Inn, said that its remuneration committee, which decides on executive pay, will discuss the issue this month.
“With the economy facing great uncertainty, and people’s jobs and livelihoods, as well as a considerable amount of public money, now at stake, it’s vital that companies make savings. Very high pay for top earners, who can easily afford a pay cut while still maintaining a lifestyle beyond the wildest dreams of most people, is the obvious place to start,” said Luke Hildyard, director of the High Pay Centre said.
It added: “Our figures show that some companies are taking meaningful action in this respect by cancelling bonuses and incentive plans, or making donations to employee funds or the NHS. Too many, however, are making token gestures or doing nothing at all.”
Meanwhile, three firms on the FTSE 100 have send staff home without slashing dividends. Primark-owner Associated British Foods has said it will furlough 30,000 staff, but has not committed to slashing its dividend.
EasyJet is furloughing around 7,500 employees, however has been criticised for paying out £174 million in dividends last month, even as the coronavirus pandemic was hitting the airline sector hard.
Auto Trader has also said it would furlough staff and has not yet confirmed plans to slash dividends. However, it has warned that if things do not get better, shareholders might have to take a hit.
“No decision has yet been made regarding the final dividend for the 2020 financial year, although if the current environment persists then it is unlikely that one will be declared,” the business said in its most recent statement to shareholders.
Nine companies have cancelled or suspended their dividends, but have not yet said they will slash executive pay.
“As the country faces the long-term implications of this crisis, it is clear that we are going to have to achieve a much fairer balance between those at the top and everybody else in future,” Mr Hildyard said.