Recent research and publications on high pay
Office for Budget Responsibility: Economic and Fiscal Outlook downgraded its forecast for nominal wage growth. They now expect real wage growth to be negative in 2013 and only marginally positive in 2014 before picking up in 2015 and reaching 2 per cent in 2016. (20th March 2013)
High Pay Centre: Top to Bottom finds that the share of national income going to the top 1 % of the income distribution has more than doubled since 1979 to 14.% from 6%. (4th March 2013)
Centre for Economic Performance: Bankers and their Bonuses says two-thirds of wage increase of top 1% of workers since 1999 came from bankers’ bonuses. (February 2013)
High Pay Centre: Paid to Perform warned that UK business is at risk unless executive rewards and high pay are linked to long term performance. (14th January 2013)
High Pay Centre: The Myth of Global High Pay Talent Market shows that just foreign poaching of CEOs accounts for just 0.8% of appointments. (11th February 2013)
High Pay Centre: ‘The State of Pay’ says Chief Executive salaries continue to soar in the face of a weak Government response (3rd December 2012)
Incomes Data Services: Directors Pay Report 2012/13 shows that the average wage rise for FTSE 100 directors was 27 per cent in 2011 – compared to an increase in national average earnings of 1.6 per cent. (22nd November 2012)
IDS: Directors’ Pay Report 2012. Basic pay and bonus growth for FTSE-100 directors has slowed, almost to a halt over the last year but the rise in the value of vested long term incentive plans means average total earnings rose to 27%. (24th October 2012)
One Society: We calculated that if the National Minimum Wage had kept pace with FTSE 100 CEO salaries since 1999, it would now be £18.89 per hour. (September 2012)
Mercer’s Financial Services: Executive Compensation Snapshot Survey. Shows 17 per cent of banks ‘clawed back’ rewards in 2011. (23th August 2012)
Tax Justice Network: The Price of Offshore Revisited. Found that, globally, the super-rich have at least $21 hidden in tax havens. (22nd July 2012)
Skandia: Millionaire Monitor. Survey of millionaires, finds, amongst many other things, that 41% of UK millionaires questioned in new survey inherited their money, while 15% made it from their own business. (July 2012)
Hay Group: Survey of boardroom views. 73% of directors who sit on the remuneration committees of FTSE companies believe pay is too high. 90% believe executive pay is not sufficiently linked to performance. (29th July 2012)
Policy Exchange: Executive Compensation: Reward for success not failure. Advocates introducing “clawbacks” to all bonus contracts as the best way to end rewards for failure in the boardroom (4thJuly 2012).
Manifest/MM&K: Total Remuneration Survey 2012. Shows under ‘remuneration awarded’ measure, executive pay rises in 25 FTSE 100 firms topped 41% (12thJune 2012).
LSE / PWC: Research questions the usefulness of increasingly-complex executive remuneration packages that have been associated with rising top pay (23rd May 2012).
Denrella andLiu: Top performers are not the most impressive when extreme performance indicates unreliability. Business school study arguing that the super-successful are outliers who achieve extraordinary things partly through luck (April 26th 2012).
Bow Group: Remuneration Nation, Responsible Capitalism and the Wider Issue with Executive Pay. 5 page briefing paper sent to all Conservative MPs, arguing that the Government must go further in tackling issues around executive pay (16th March 2012).
University of Southampton: Leadership structure of the UK’s largest companies. Suggests turnover rates or ‘churn’ in the position of chief executive a key argument for high executive pay are much lower than commonly perceived (15th March 2012).
Incomes Data Services: Pay increases for FTSE-100 NEDs. Finds the majority of FTSE 100 non-executive directors received a 10pc pay rise last year, about four times the average increase for ordinary workers. (20th February 2012)
One Society: Neither necessary nor desirable: The adverse impacts of excessive executive remuneration on UK plc. Briefing paper challenging assertions that very large remuneration packages for company directors are necessary to recruit, motivate and retain them (22nd January 2012).
IPPR: Pay and performance: creating a fairer share of rewards. Analysis showing the weak relationship between CEO remuneration and company performance among the FTSE 100. Finds that in 2010/11, CEO remuneration increased by 33% whilst company value went up by just 24%. The figures are even worse in banks at 81% vs 19% (7th January 2012)
Donaldson, Gershun and Giannoni: Some Unpleasant General Equilibrium Implications of Executive Incentive Compensation Contracts. Finds that when CEOs are paid highly in options or restricted stock the economy becomes more volatile as incentives may be driving CEOs to invest less. (December 2011)
Tax Justice Network: A briefing paper on the cost of tax evasion worldwide. Suggests there is little to link high taxes for the rich, and increased tax evasion (13th December 2011).
University of Exeter Business School: A study of corporate directing – 25 years on. Finds that in 1987 the average annual salary for a Chief Executive of a UK listed company was £150,000. By 2009 this had risen to £4 million (12th December 2011).
St Paul’s Institute: Value and Values: Perceptions of Ethics in the City Today. A survey of 500 workers in City financial institutions, found that “a substantial number” believed they were overpaid compared with other professions – particularly frontline workers, including teachers and nurses (6th November 2011).
IPSOS Mori/ High Pay Commission: Just deserts, or good luck? High Earners’ attitudes to pay. High earners feel that they are closer to the ‘squeezed middle’ than the ‘super rich’. Most participants thought there was little correlation between hard work and/or aptitude and the absolute amount that a person earns (9th November 2011).
High Pay Commission: Cheques With Balances: why tackling high pay is in the national interest. A 12-point plan for tackling excessive executive pay (22nd November 2011).
Incomes Data Services: Directors’ Pay Report. Found FTSE 100 directors have seen their total earnings increase by an average of 49% in the last financial year, and are now averaging £2,697,664 per annum (26th October 2011).
The High Pay Commission: What are we paying for? Exploring executive pay and performance. Concludes that the drive to link executive pay to performance in publicly listed companies has not been successful. Massive growth in performance related pay has not brought a corresponding leap forward in company performance (5th September 2011).
Association of British Insurers: Report on Board Effectiveness. Examines effective boardroom performance and executive pay and finds that excessive or undeserved remuneration undermines the efficient operation of the company, adversely affects its reputation and is not aligned with shareholder interests (28th September 2011).
Obermatt: Rankings United Kingdom (FTSE). Shows FTSE 100 companies are not very good at linking executive pay with performance. Only 14 FTSE 100 groups in the study pay what Obermatt says is within 20 per cent either way of what their chief executives deserved(7th August 2011).
PwC: Executive pay set to increase unless turbulent markets take their toll. Finds 79% of senior reward professionals across the FTSE 350 say executive pay will rise in 2012. However, the report also says that, in 2012, 30% of firms are planning to introduce ‘clawback schemes’, or companies reclaiming chunks of executives’ pay in certain situations (30th August 2011).
Centre for Economic Performance: Bankers’ Pay and extreme wage inequality in the UK. Explores increased pay dispersion at the top of the wage distribution, investigating why bankers have captured an increasing share of income over the last decade (April 2010).
Ariely, Gneezy, Loewenstein, and Mazar: Large Stakes and Big Mistakes. Study in India suggesting excessive rewards can produce supra‐optimal motivation, resulting in a decline in performance. Performance related bonuses amounting to 6 months expenditure were offered leading to worse performance than when offered smaller bonuses (2005).
Gneezy and Rustichini: Pay Enough or Don’t Pay at All. Experiment asking children to collect money for charity. When allowing them to keep 1% of their takings – the amount of money collected reduced by 38%. This reduction in income occurred even when 10% of takings could be withheld. Finds monetary incentives often override intrinsic ones (2000).
Lepper, Greene, and Nisbett: Undermining children’s intrinsic interest with extrinsic reward: A test of the “overjustification” hypothesis. Experiment giving children a drawing task, first without, and then with a reward for completion. Those with no reward realised the intrinsic value of the task and continued once the test was over, those with rewards left immediately (1973). A similar experiment was undertaken using undergraduates by Deci: Effects of externally mediated rewards on intrinsic motivation (1971).