The job retention scheme is all well and good, but what is corporate excess Britain doing to balance the books?

The median FTSE 100 executive salary is £850,000. A 20 per cent salary cut lasting three months would represent a loss to the CEO of £42,500. This is chump change to them

If ever there was an example of how we’re not all in it together, I give you the response of Britain’s business leaders to the government’s Job Retention Scheme – a scheme which was ushered in to deal with the brutal economic fallout of the coronavirus crisis.

Let me explain. The High Pay Centre found 18 per cent of the FTSE 100, and 23 per cent of the second tier FTSE 250, have used it to put workers on furlough. The taxpayer will therefore cover 80 per cent of these furloughed workers’ salaries, plus employer national insurance contributions, capped at £2,500 a month.

The scheme is a vital and progressive measure that will reduce the economic blowback from the virus. It’s one of the few things that the government has gotten right in terms of its response.

But as well as benefiting workers, who might otherwise find themselves tipped into unemployment, it also serves as a corporate, executive and shareholder bailout. It will also help the businesses that aren’t taking part in the scheme, because they will clearly gain from the economy being kept afloat and workers having cash in their pockets.

What we have here is a vast transfer of wealth from the public to the private sector, with the aim of keeping the economy afloat. The government is proposing to borrow £42bn to fund it, which is as much as the combined profits of Britain’s top companies over five years.

Only a minority of companies appear to have recognised that tough times demand a response from them too, and not just a reliance on government funding.

In the FTSE 100, just 33 per cent have withdrawn or withheld dividend payments while 37 per cent have cut executive pay.

But in some cases, the cuts don’t add up to much: executives are being told to play nice and pass on the £301.44 alloy wheel protectors, having already dropped £77,000 on a top of the range Lexus hybrid.

Hang on, cry the financial PR firms, the valiant defenders of corporate excess. How can you say that, when even the High Pay Centre has seen typical pay cuts of between a third and a fifth? It’s time to clap for fat cats on Thursday night because they’re getting a lot thinner!

But here’s a question: are the announced cuts being made to their annual salaries or will they just be imposed pro-rata during the lockdown? That’s an important point.

And there’s more.

Consider bonuses. A corporate PR person would tell you that incentive pay is (usually) tied to earnings and shareholder returns.

But the assessment process is murky at the best of times, and often eschews absolute performance in preference to performance relative to rival companies. Put simply: a CEO can end up getting paid more for losing money just as long as they lose less than the rival down the road.

Finished? Um, no. Here comes the stinger. While many of us will have suffered financially through the crisis, CEOs could ultimately end up getting paid more because their incentive packages are typically delivered in the form of free shares.

If those shares are issued when the stock market’s in a trough (which is where it has been), and it then recovers, then ker-ching, it’s CEO lottery time. They will be able to afford not just those alloy wheel protectors, but also the full £7,000 package of toys Lexus offers on its top models.

Now, the median FTSE 100 executive salary is £850,000, and the median bonus is £1.4m on top. A 20 per cent salary cut lasting three months would represent a loss to the CEO of £42,500. This is chump change to them, even if it’s more than the average British worker gets paid in a year.

A 30 per cent cut to annual salary  and the cancellation of bonus payments, however, would amount to a loss of £1.65m. Even then, our CEO would still be a member of the 0.00001 per cent. They wouldn’t go hungry and could still order whatever Lexus model they wanted (the company usually pays anyway).

But it would at least represent a meaningful gesture, at a time when many low-paid workers are putting themselves in harm’s way to keep the economy going.

The job retention scheme was offered with no strings attached, which has sparked some controversy given its use by people like Victoria Beckham. The scheme was designed to ensure maximum take-up, and was a sensible move, supported by the unions.

But corporate Britain, with its grotesque pay packages and general contempt for workers, nonetheless needs to wake up to what’s been going on if it wants to avoid a nasty reckoning. So far it isn’t doing that.