Laundry company directors who had given themselves a 20% pay rise or more last year were, in many cases, justified, concluded a report by Plimsoll Publishing.
The report, which conducted a study on the effectiveness of a board of directors to see if their pay was performance-related, identified that the average sales growth of 38 companies, whose director’s fees had risen by 20% or more, was 8.2%—double the average sales growth for the industry of 4.2%.
Pre-tax profit margins on these companies was on average 4.2%, which was lower than the industry average of 4.8%.
Average employee’s salaries in these companies, the report stated, were higher in this band of companies at £9313 per year, compared to an industry average of £8579.
However, the report noted that a high proportion of these companies were in financial risk. The number of companies in financial risk was high at almost 53% in the industry, yet the number of companies with a 20% increase in salaries for directors was even higher at 63%.
The report concluded that company directors should expect fees to be performance related. If they fail, which 42% of directors did last year, they should expect their fees to fall by one quarter of their salary. But if they deliver extraordinary results, they can expect at least a 20% increase in salaries.
