Are British bosses paid too little?

The issue of pay for British bosses has been re-ignited by an article in the Main on Sunday.

“In an effort to determine whether British bosses are underpaid, the Mail has compared the pay of chief executives from leading firms in the UK and US, finding that while business leaders in the US generally earn more than their British counterparts, the gap is not always vast, especially when stock market valuations are considered.”

The number of leading companies pushing for pay rises for their leaders has jumped even after they trousered an average of £4.5 million, a recent study revealed.

The analysis by business consultancy Deloitte found that 16 FTSE 100 companies are looking to revamp their pay policies – with nine of them having ‘radical’ plans to boost their boss’s pay this year, compared to four previously.

Delve a little deeper and it seems that in the US while bosses may earn more than their British counterparts, they are often paid more in shares, whose value can, of course, fluctuate dramatically.

A comparison of the pay for bosses on both sides of the Atlantic found that while US bosses did indeed earn more, they were often the heads of significantly larger companies.

An example is BAE Systems compared to Lockheed Martin, where the boss of the latter is paid almost £5 million more. However, the American company is worth twice as much as the British one when comparing their share prices.

It is also true that US bosses wield much more power in the boardroom than their UK peers. They usually combine the role of chief executive and chairman, which is less common in the UK.

So is it a case that comparing bosses’ pay simply on monetary value is a blunt stick, and like comparing apples and pears?

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