SALARIES BILL

Salaries Bill

Salaries Bill

Introduction

In 2008, the average salary for the CEO was £208,759. The average salary in 2009 was £76,415, based on 87 respondents (a difference of -63% from the 2008 figure. The average salary in 2010 was £76,400, based on 80 respondents (a difference of 0% from the 2009 figure. The average salary in 2011 was £82,312, based on 122 respondents (a difference of 8% from the 2010 figure. The median salary for a Ceo based on all salary survey responses is: £70,000. (Annual Survey Report 2010: 15)

High quality public services require high calibre leaders to deliver them, especially in difficult fiscal conditions. A key challenge for Government is to maintain and improve the standard of public service leadership as the structures of public service delivery are reformed. Vital to this will be to ensure that public service leaders are adequately and fairly rewarded for their contributions, and that the public service ethos - that sense of mission and public duty that motivates many to work delivering public services - is maintained. This requires that a delicate balance be struck (Pouliakas & Theodossiou 2009: 244-249). If senior public servants are inadequately rewarded, it will be ever more difficult to attract and retain individuals of the calibre required. At the same time taxpayers are right to demand value for money from public resources, and an assurance that their money is not being wasted on excessive executive salaries. Without that assurance, trust in public services cannot be maintained. (Bourguignon et. al. 2007: 121-128)

Yet public understanding of both senior public service roles, and senior public service pay, is often very poor. A quarter of the public believe that public sector executives are currently paid more than their counterparts in private businesses, while in fact executive pay in large listed companies far outstrips that in even the largest and most complex of public bodies(Georg & Harvey 2009: 835-851). The public also often have limited knowledge of what senior public servants actually do, so are not in a position to judge what level of reward is fair for these roles. Meanwhile the absence of a consistent framework of senior pay principles denies citizens reassurance that rewards are fairly matched to responsibilities and performance, and leaves a gap in which mistrust of public servants can grow. (MacLeod & Clarke 2009: 46-51)

Discussion

The revolution in executive remuneration is a part of this wider trend to greater pay dispersion; hence the importance of assessing its fairness. The Interim Report described how over the 1980s and 1990s the executive remuneration package, in listed companies in the US and then in the UK, changed as shareholders made greater use of share-based incentives that sought to tackle head on the principal-agent problem. Survey data suggests major above-inflation rises from the late 1980s, with bonuses and long-term incentive elements becoming much more important from the mid 1990s onwards (Babcock 2011: 89-93).

CEO total available pay (including earn back) increased by 12.5% (on top of cost of living increase of ...