HISTORIC PRESS RELEASE : Boardroom Pay Continues to Cause Concern [August 1998]
The press release by HM Treasury on 11 August 1998.
The total remuneration of major privatised utility company boards has increased by around 18 per cent over the last year, Treasury analysis of a Utility Week survey showed today.
The survey, which showed total utility boardroom remuneration growth of 15 per cent, shows a rise of around 18 per cent for major privatised utility companies. The figures also show some individual chief executives receiving pay increases of over 40 per cent.
Chief Secretary Stephen Byers said today:
“The Government has said time and time again that pay responsibility must be shown from the boardroom down to the shop floor.
” People must recognise that today’s excessive pay increase could be tomorrow’s interest rate rise or mortgage increase. That is why the Government warned, in response to the consultation on the Utility Green Paper, that it would consider taking action to increase shareholder control over directors’ pay unless there is a more positive approach by all companies. For the price regulated utilities, we believe that regulators should write an open letter to the remuneration committee setting out how well service standards have been achieved.
“Today’s figures give cause for concern. Where performance has not been outstanding, it should not be rewarded. The Government wants to see boardroom pay linked to the achievement of rigorous, long-term performance standards. Consumers expect and deserve high standards of service, and the Government has set out steps to develop a clearer link between the setting of boardroom pay and the achievement of demanding service standards. There is a particular concern where consumers do not have an effective choice of supplier. The interests of customers should be set firmly on the boardroom agenda; these figures suggest this is not the case.”
