FTSE 100 firms that have furloughed staff under the Government’s Coronavirus Job Retention Scheme (CJRS) paid their chief execs an average of £3.6million per year before the pandemic hit, a new analysis has claimed.
The research, from thinktank The High Pay Centre, claimed that, as of April 22, 2020, the 18 companies who announced that they would use the CJRS scheme, spent a combined £321million on chief executive pay over the last five years – The Guardian reported.
Under the scheme, the Government has committed to paying 80% of furloughed staff wages, which could amount to £2,500 per month. According to Gov.uk, employers can choose to top up the wages of furloughed employees to make it to 100% but this is not compulsory.
In the report, titled How Are UK-Listed Companies Responding to the Economic Shutdown, the High Pay Centre said: “In these circumstances, it is highly questionable whether companies in receipt of public money should continue to disproportionately channel private gains to a small number of often very rich people, in the form of very high chief executive pay and dividend payments.
“It is right to question the resilience of companies that have lavished billions on shareholders and executives in recent years, but now depend on public funding to cover their costs throughout what will hopefully be a brief pause in economic life.”
Companies that have announced plans to furlough workers under the Government scheme include: Next, JD Sports, Primark owner Associated British Foods and easyJet.
However, some organisations that are taking advantage of the CJRS have also announced cuts to executive pay.
According to a City A.M. report, Primark bosses have taken a 50% pay cut and slashed executive bonuses after plummeting profits due to the coronavirus pandemic.
Additionally, a recent Drapers report stated that, to help cut costs, JD Sports' Executive Chairman, Peter Cowgill, will take a 75% pay reduction, while the group's Board and senior management team have agreed to take a salary reduction of at least 25%.
While the survey found that 37% of FTSE 100 companies have cut executive pay to slash costs during business shutdown, only 13% have cut bonuses and long-term incentive payments. A third have withdrawn or withheld dividend payments.
This isn't the first time that high executive pay has come under scrutiny.
FTSE 100 bosses rake in £901 an hour
Earlier this year, research from the CIPD and High Pay Centre found that three working days into the new year, the typical FTSE 100 CEO had already taken home the equivalent of what a typical UK worker makes within a whole year.
According to 2018 data, the average CEO raked in £901 per hour which contrasts to the hourly wage of £14.37 for the average full-time employee.
The figures came as large publicly listed firms with more than 250 UK employees are now required to disclose the ratio between CEO pay and that of their average worker, as well as justifying the reason for the discrepancy.
Peter Cheese, Chief Executive at the CIPD, previously said 2020 is the first year that businesses are properly being held accountable for high executive pay.
“Pay ratio reporting will rightly increase scrutiny on pay and reward practices, but reporting the numbers is just the start.
“We need businesses to step up and justify very high levels of pay for top executives, particularly in relation to how the rest of the workforce is being rewarded.
The High Pay Centre and CIPD’s data identified some of the highest paying chief execs as Persimmon’s former CEO, Jeff Fairburn (£38.9million), Royal Dutch Shell’s CEO, Ben van Beurden (£17.8million) and Reckitt Benckiser’s former CEO, Rakesh Kapoor (£15.2million).
