Sunday August 28, 2022

At the time of inflation and public woes, bosses are enjoying stratospheric salaries

At the time of inflation and public woes, bosses are enjoying stratospheric salaries

Alistair Phillips-Davies of SSE who walks away with an annual package of £4.5m.

Cathy Newman, The Independent

Earlier this month, the National Lottery appealed for the mystery winner of £10,000 a month for 30 years to come forward. If you can’t be bothered to check your numbers, though, you could always go one better and run an energy company. Because it turns out that, as millions of us face a horrendous increase in our energy bills, some of the power bosses are taking home a tidy fortune.

Earlier this week on Channel 4 News, I interviewed Alistair Phillips-Davies, the chief executive of SSE, the FTSE 100 group that runs wind farms, gas-fired power plants and energy networks. I asked if he was embarrassed to receive a total annual pay package of a staggering £4.5m, up 47 per cent in a year, when people are struggling to work out how to feed themselves or heat their homes this winter.

His basic salary alone was £900,000, but once a £1.2m bonus, a £2m “long-term share bonus”, pension contributions and other benefits were taken into account, he truly must have felt he’d won the lottery.

He didn’t seem particularly embarrassed being asked to defend such riches, and when I posted the clip on Twitter and TikTok, the exchange prompted a huge, and rather angry, response.

Executive pay has always been a hot-button issue, but as the cost of living crisis takes hold, there is a growing sense of fury that while most people’s real wages have stagnated for a decade or more, the bosses have been enriching themselves. Only in 2020 did average wages “adjusted for inflation” get back to the levels they’d been at before the 2008 financial crisis. The Institute for Fiscal Studies called it a “lost decade” of earnings growth that had blighted the UK.And it’s not just the comparison with their own insipid pay packets that infuriates people, but the perception that the link between pay and performance can be, to put it politely, flimsy.

The water company top bods have paid themselves gazillions to preside over infrastructure that leaks both H2O and sewage. While water companies mislay up to a quarter of their supply each day, chief executives such as Severn Trent’s Liv Garfield lap up the corporate rewards, enjoying £3.9m in total pay and perks last year.

Severn argues that 75 per cent of that package is “directly linked to delivery”, claiming that it reflects a “range of customer and environmental measures”. Admittedly, SSE’s remuneration policy is partly linked to hitting laudable net zero targets. And the boss clearly did a grand job for his shareholders last year (adjusted operating profits rose to £1.5bn). But some of that was down to “luck”, if that’s the right word, as its gas-fired power plants cashed in on high prices.Lest you think I’m picking on the two corporate bogeymen of the moment — water and energy — the picture appears to be the same across Britain’s top 100 firms. Chief executives of the FTSE 100 companies have seen their pay jump by 39 per cent to an average of £3.4m, according to research by the High Pay Centre think tank and the Trades Union Congress (TUC). The TUC wants reforms, including putting worker representatives on the committees that set top pay.

The closest the SSE boss got to defending his millions was to say that his pay award was transparent and agreed by an independent remuneration committee. But how independent are those committees?

Luke Hildyard, the High Pay Centre’s executive director, has said “most people would be astounded if they realised that pay levels for chief executives are set by committees made up of other chief executives and people in similar roles”. When hard-working staff who haven’t got near a real wage increase in years see executive salaries shooting into the stratosphere, it’s little wonder more and more are turning to strike action.

Train staff, barristers, dock workers, refuse collectors: the list of workers downing tools is lengthening, and when even journalists at The Daily Express — which has railed against “militant trade unions” bringing Britain to the brink — say they’ll go on strike, we may be on the cusp of a fairly profound shift in public attitudes. Labour is in a difficult position here, and Sir Keir Starmer knows it. Sympathy and help is required for people desperately worried about soaring food and fuel prices. But take to the picket lines himself and he walks into a political trap, with the Conservatives desperate to paint Labour as anti-business and not to be trusted on the economy.

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