One in four top bosses have taken a pay cut in wake of Covid-19, research reveals

High Pay Centre report finds many FTSE 100 chief execs have agreed to salary and bonus reductions, but a small number have yet to act

One in four of the biggest companies in the UK has cut the amount paid to chief executives as a result of the coronavirus crisis, according to research. 

A survey and analysis of FTSE 100 company announcements by the High Pay Centre, shared with the PA News Agency, found bosses at 25 of the UK’s top companies had reduced their salaries and fees by 20 per cent – the same proportion many furloughed workers have forfeited (where their employer hasn’t topped up the 80 per cent of salary covered by the government’s job retention scheme). 

However, the report found one company had not yet announced plans to cut its chief executive’s pay, despite sending staff home. Meanwhile, three other businesses were still paying shareholder dividends. 

Other companies have gone further than 20 per cent cuts, with the chief executive of Rentokil, Andy Ransom, reducing his salary by 35 per cent and donating the remaining 65 per cent to an employee fund. 

Two companies, Whitbread and Land Securities, said pay cuts would be discussed at future board and remuneration meetings, while 11 companies – including Centrica, HSBC, Lloyds, ITV and Persimmon – have scrapped bonuses and/or long-term incentive plans for executives. 

The High Pay Centre found 10 companies intended to furlough staff through the government’s job retention scheme, with the body predicting this number was likely to grow. These businesses were: Associated British Foods, Auto Trader, Centrica, easyJet, International Airlines Group, Melrose, Next, Rentokil, Taylor Wimpey and Whitbread. The High Pay Centre said Rolls Royce also reported plans to furlough staff.

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Luke Hildyard, director of the High Pay Centre, said it was vital companies made savings to preserve business continuity and people’s jobs. He said cutting the pay of top earners was the “obvious place to start”. 

“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,” Hildyard said. “Too many, however, are making token gestures or doing nothing at all.”

Only Whitbread, which owns Premier Inn, had announced plans to furlough workers without confirming it would reduce top earners’ pay. But the company said its remuneration committee would discuss the issue this month. 

Three firms in the FTSE 100 had furloughed staff without reducing dividends. Associated British Foods, which owns fashion retailer Primark, said it would furlough 30,000 staff but had not committed to cutting its dividends. 

Meanwhile, easyJet is furloughing 7,500 workers and paid out £174m in dividends last month. Auto Trader also said it would furlough staff but had not yet confirmed it would cut dividends. 

Hildyard said: “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.” 

Company directors outside the FTSE 100 have also announced taking pay cuts. Paving stones maker Marshalls has said its entire board were taking a 20 per cent reduction in pay until further notice. Revolution Bars, which has furloughed 2,775 staff, said it was cutting board members’ pay by 50 per cent, along with significant salary reductions for other senior employees still working.

Earlier this month, brewery BrewDog bosses James Watt and Martin Dickie announced they would not take a salary in 2020 to protect jobs across the business during the outbreak. Watt revealed the move on Twitter, adding that many of the brewery’s senior team had also taken salary cuts to prevent job losses across the organisation, including chief operating officer David McDowall, who has taken a 50 per cent pay cut. 

Watt told The Grocer: “This is a very tough time for all businesses, and we have two priorities: firstly to survive, and secondly to protect as many jobs as we can.”