Hello. It looks like youre using an ad blocker that may prevent our website from working properly. To receive the best Tortoise experience possible, please make sure any blockers are switched off and refresh the page.

If you have any questions or need help, let us know at memberhelp@tortoisemedia.com

Big pay for big bosses

Big pay for big bosses

0:00

The chief executives of the UK’s biggest listed companies have seen their pay soar. On average, they were paid 30 per cent more this year compared to last year. What’s driving the increase?

Ken Murphy has had an extraordinary two years. 

He became CEO of Tesco, the UK’s biggest supermarket chain, in October 2020.

Since then he’s steered the business through unprecedented global challenges, from Covid to rising food prices, caused partly by Russia’s invasion of Ukraine.

“Really what Tesco exists for is, “how do you take something that maybe starts as a niche and make it available to the vast majority of the population, at an affordable price?” And that’s our mission.”

Reuters

Tesco shoppers are facing the biggest squeeze on household incomes since at least the 1950s, thanks to increasing labour, energy, and transportation costs. 

And Ken Murphy says the company is “laser-focused on keeping the cost of the weekly shop in check”.

“At Tesco we want you to spend less with us on everything, from your staples to everyday essentials… because right now every little helps.” 

Tesco ad

But despite cost-cutting initiatives, including price matching against the budget supermarket Aldi, customers at Tesco are still seeing the cost of their shopping go up.

“Grocery chains are battling for market share while many shoppers fight simply to get by, as the focus is increasingly on price.”

ITV

But… Ken Murphy doesn’t share the financial pain faced by some of his customers and staff.

Over the past year, he’s earned 4.74 million pounds, which includes the highest annual bonus awarded by the supermarket since 2016.

His total pay was 224 times the total pay and benefits of the average member of staff at Tesco, who has an annual income of £21,217. 

That’s about £4,000 less than the minimum acceptable standard of living, according to the Joseph Rowntree Foundation, which is why some workers were willing to go on strike last year

“Warehouse workers and drivers at Tesco are to hold a series of strikes over pay. The decision was made because workers were not offered a pay deal that keeps up to pace with inflation. More than one thousand Unite members based around the country will strike for 48 hours from 6am on December the 16th. Additional strikes will be held after Christmas. The industrial action could lead to shoppers in many parts of the country facing empty shelves in the run-up to Christmas.”

Channels Television

Tesco saw off that industrial action by making improved pay offers. And the company recently offered its staff advances, to help them avoid falling into debt. 

The man who oversees how senior executives are paid at Tesco has defended how much the CEO earns. In a company report, he said that Ken Murphy’s take-home pay was fair, and he was satisfied that the bonus payouts were “appropriate”.

And actually, Ken Murphy’s eye-watering payslip isn’t unusual amongst top executives at some of the UK’s biggest businesses.

***

Tortoise’s Responsibility100 Index looked at the UK’s biggest listed companies. The ones in the FTSE 100 share index. 

It found that, on average, CEOs of those companies were paid 30 per cent more this year compared to last year.

The accountancy firm PWC thinks the salary increases were driven, in some sectors, by a post-Covid boom. In others it was down to performance targets being set lower in 2021 because of market uncertainty.

And while the average CEO pay this year was 3.7 million pounds, fewer than half of FTSE 100 companies guarantee their employees the Living Wage.

The disparity hasn’t gone unnoticed. Here’s Alistair Phillips-Davies, CEO of energy company SSE, being questioned by Cathy Newman on Channel 4 News:

Cathy Newman: “Do you not feel at all embarrassed getting paid millions of pounds, when households up and down the country are struggling to feed themselves and heat their homes?”

Alistair Phillips-Davies: “As I’ve said, as regards my pay, I don’t set my pay. It’s very transparent when I get paid. Unlike many people, is it transparent.”

Channel 4

If the trends are to be believed, CEO pay checks will continue to rise.

Being a CEO is not an easy job. These are, after all, some of Britain’s largest companies. But a business’ success is an accumulation of effort, shared by all of its employees. From the shop floor to the boardroom.

If CEOs continue to be handsomely remunerated while employees struggle to make ends meet, there’ll be growing disenchantment in some workplaces.


This episode was written by Maddy Diment and mixed by Hannah Varrall.