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.
Most bosses at the 25 firms who have reduced pay have also cut their salaries and fees by 20 per cent, which is the same proportion 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.
The chief executive of Rentokil, Andy Ransom, has slashed his salary by 35 per cent, and donated the rest of it to an employee fund.
However, three other companies are still paying shareholder dividends despite using the government’s furlough scheme.
It comes as the government’s watchdog warned yesterday that the economy faces shrinking by more than a third this quarter with two million people made jobless as coronavirus wreaks havoc.
The chief executive of Rentokil, Andy Ransom, has slashed his salary by 35 per cent, 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 per cent of their salaries covered by the Government. This figure is likely to grow.
Bosses at Premier Inn owner Whitbread have agreed to cut their pay by 30 per cent as part of measures to mitigate the impact of coronavirus.
Chief executive officer Alison Brittain and executive directors Nicholas Cadbury and Louise Smalley have all agreed to the salary reduction and will not take bonuses for the 2019-20 financial year.
The company said all other staff will receive full wages, with staff furloughed under the Government’s coronavirus job retention scheme seeing their wages topped up by the firm.
Bosses at Premier Inn owner Whitbread have agreed to cut their pay by 30 per cent as part of measures to mitigate the impact of coronavirus. Chief executive officer Alison Brittain pictured
RBS boss Alison Rose has seen her salary cut by 25 per cent, while she will also not be receiving a bonus.
ITV’s Carolyn McCall will also not receive a 2020 bonus, with her salary being cut by 20 per cent.
‘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.’
RBS boss Alison Rose has seen her salary cut by 25 per cent, while she will also not be receiving a bonus
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.
ITV’s Carolyn McCall will also not receive a 2020 bonus, with her salary being cut by 20 per cent
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.
Yesterday, shocking analysis from the Office for Budget Responsibility underlined the trade-offs being made to combat the deadly disease by putting the country into lockdown.
It warned curbs staying in place for three months will slash GDP by 35 per cent, with unemployment soaring to 10 per cent and the government’s deficit hitting £273billion – the highest level since the Second World War.
Bosses at the 25 FTSE 100 companies in London who have cut pay have also reduced their own salaries and fees by 20 per cent, the same proportion that furloughed workers are forfeiting
The watchdog ominously said it was assumed ‘for now’ there will not be any fundamental economic damage, and much of the crash will be unwound as pent-up demand is unleashed.
However, the resulting 13 per cent drop year-on-year is still worse than anything in the last century.
Responding to the chilling scenario – which emerged as the IMF predicted the worst global downturn since the Great Depression in 1929 – Chancellor Rishi Sunak said ‘people should know there is hardship ahead’.
At the Downing Street briefing yesterday, he said the UK was facing ‘tough times and there will be more to come’.