Esh Group bosses' pay cuts given warm welcome

Nov 12 2009 by Peter McCusker, The Journal

THE North East business community has welcomed the decision by directors at the Esh Group to cut their pay by 30% and said that many others senior executives were doing likewise to avoid staff job losses.

We reported yesterday that Esh chief executive Brian Manning has cut his annual pay from £250,000 to £175,000, while former Newcastle United chief executive Freddie Fletcher, Esh’s executive director, also sustained a 30% cut.

The eight-strong board said it was taking the extreme measure to “show solidarity with their workforce” after previously axing 200 jobs and posting a loss of £6.4m in 2008 compared with a £10m pre-tax profit in the previous year.

The pay cuts, which should save Esh £150,000, have been warmly received by industry chiefs.

Ross Smith, head of North East Chamber of Commerce policy, said: “There are a number of firms that have taken the same decision over recent months, with directors showing that they are willing to take the same amount of strain as their workforce.

“In this case, directors at Esh should be commended for the size of the cuts they have made among senior staff, which shows that they are prepared to go the extra mile to safeguard jobs.

“As we have seen, the first reaction among directors is usually to look at how many jobs they can scrap in order to save costs. Esh has shown there are a number of alternative avenues that can and should be considered first.”

Alan Hall, regional director at manufacturing group EEF, said: “Esh is not the only company to have made such a bold decision.

“There are many directors that have made such a move and have managed to protect their workers.

“However, most of those are maybe less willing to discuss it.

“It must be said that directors who take such a hit are displaying faith in their workers to help them through these difficult times, and it is impressive that they are prepared to spread the medicine around.”

Sarah Green, regional director for CBI North East, said: “This is an excellent example of a company that is determined to do what it can to save its workers as well as protect the future economy.

“We need skilled workers to help us through the current situation, and cutting executive pay to help navigate the downturn should be commended.”