Overshadowing the announcement, however, was the simultaneous report that Haines would be paid a not-insubstantial 27% lower than his predecessor Mark Carne (£588,000 a year inclusive of benefits, down from a pay package of £820,000 a year).
Not only this, his salary will be subject to annual review and the role is now said to have an “at risk” performance-related pay element of up to 9% of basic salary dependent upon various metrics including “safety, financial, asset management, project delivery and customer and train performance metrics.”
In contrast, Carne’s salary had controversially made him the best-paid civil servant in Britain at the time it was made public. He had a performance-related pay element of up to 30% of basic salary that was dependent on meeting the same conditions as Haines.
It would seem there has been serious thought about the new role, leading to a re-evaluation of remuneration probably in part due to media coverage and public perceptions of rising ticket prices, cancellations, staff strikes, industry debts, and most recently, franchise collapses.
According to payscale.com, as of May 2018, an executive in the UK with greater than 20 years of experience can expect to earn an average total of £119,000 based on their sample of 1,402 survey participants. Salaries then increase by 27-36 percent in London/Cambridge.
However, as you would expect, executive leaders heading up global brands can command far higher compensation to match their pivotal role in fiscal operations and culpability in the success or failure of an organisation.
According to The Economic Times, chief executives at the largest public companies in the world got “an 8.5% raise last year, bringing the median pay package for CEOs to $11.7 million. Across the S&P 500, compensation for CEOs is often hundreds of times higher than typical workers.”
Compensation obviously varies enormously between industries, from Pharmaceuticals to Financial Services to Utilities. Media companies such as Fox or Viacom, for example, have dual-class stock giving the controlling shareholder near complete power and are therefore are above performance concerns.
The topic of executive salaries is probably one that causes the most debate with employees, especially given the variation from business to business and CEO to CEO. With this in mind, here are a few recent examples of global CEOs hitting the headlines for their pay:
Gavin Patterson, CEO, BT
The CEO at BT, Gavin Patterson, has just been reported as paid £2.3m over the past year. This news came only weeks after BT announced it was cutting 13,000 jobs in a cost-saving exercise and as the company’s share price has fallen by more than a third. Patterson has now had a pay rise taking his base salary above £1m next year and the rest to be made up of bonuses.
In was reported that Patterson significantly reduced his take-home pay from a huge £5.3m in 2016 after giving up his entire bonus following the last company accounting scandal… but I suspect most employees would find it hard to muster much sympathy for him given the circumstances!
Dan Price, CEO, Gravity Payments
In contrast, Tech entrepreneur Dan Price was all over the internet in 2015 after he took a pay cut and slashed his own $1.1m pay package to give ALL his employees a minimum salary of $70,000 each. He said at the time he wanted to curb the dangers of “unbridled capitalism.”
Following a brief period when naysayers (including members of his own family) denounced the whole episode as merely a PR stunt, the company now has an average employee salary of $103,000 with 80% more clients than when the living-wage experiment started three years ago. Now, other companies are following suit and committing to a far higher-than-average employee living wage.
Douglas McMillon, CEO, Walmart
Walmart’s CEO was one of six top international figures featured in a recent CNBC article about CEO pay packages. Walmart is the largest private employer in the US with over 1.5 million staff.
Although efforts have been made to address living wage at Walmart, the article states that the “median employee at Walmart made $19,177 last year. In that time, Mr. McMillon made more than $22 million, resulting in a pay ratio of 1,188.” Given that thousands of their employees qualify for additional state support alongside their salaries, Walmart has faced criticism for not doing more.
Stephen Kaufer, CEO, TripAdvisor
In 2017, Kaufer was reported as the most rewarded CEO in online travel, getting $43.2m, the fifth highest-paid CEO among Fortune 500 public companies in the US. Kaufer received “grants of options and restricted stock valued at $42.1 million” making up the bulk of the compensation.
Mark Newton-Jones, CEO, Mothercare Plc
Mothercare is going through a period of uncertainty right now after a flurry of changes at the top. CEO Mark Newton-Jones was forced out by Chair, Alan Parker, who then also left only weeks later.
Fast forward 44 days, the company’s interim executive chairman rehired Newton-Jones but with a 22% (£132,000) pay cut, from £612,000 to £480,000. Mothercare has since announced an extensive programme of restructuring and store closures as it faces challenging times ahead.
What are your thoughts on CEO salaries?
Should there be such variance between organisations and industries, or should more be done to standardise compensation at the top?