Executive pay has once again hit the headlines over the past few days, with reports of 49% increases for FTSE 100 directors being generating widespread outcry and even eliciting comment from David Cameron.But is the correct story being told as regards the numbers behind the headlines?
Some of the media coverage on this topic fails to recognise the crucial difference between the mean and the median when it comes to measuring averages.
Nearly all stories on this topic have focused on average increases to total earnings for FTSE 100 directors. And some of these stories get their medians and their means mixed up.
As my colleague Sheila Attwood notes (Subscription required): "Using the median, rather than the average, avoids the influence of particularly high, or low, pay rises, which would distort the figure."
But if the executive pay story is at risk of getting distorted in 2011, how much blame actually lies with the media?
And haven't we been here before?
- For full details, see: Executive pay controversy 2011: Plus ça change...
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