FTSE 100 bosses earn 133 times more than average worker
The professional body for HR and people development analysed the most recent data available for FTSE 100 chief executive officer (CEO) pay and found that earnings in this segment increased by 11% to £3.9m in 2017. This figure is based on the assumption that bosses worked 12 hours per day for 320 days per year.
This means the bosses of the UK’s largest 100 listed companies earned 133 times more than the average worker. The CIPD and High Pay Centre concluded that a typical FTSE 100 chief executive only needs to work for the first three days of 2019 to earn the same amount as the average full-time worker’s gross annual salary, which stands at £29,574.
With this in mind, the CIPD has nicknamed 4 January “Fat Cat” Friday.
In light of these findings, the professional body is calling on remuneration committees, which are in place for all FTSE 100 companies, to do more to ensure that executive pay is aligned with the rewards that are given to the wider workforce. They suggest taking into account the non-financial performance of companies, including factors like employee wellbeing and investment in training and development.
The CIPD and High Pay Centre have also suggested a simplification of executive pay, based on a basic salary and an incentive to deliver long-term performance, with a smaller share award given in comparison to recent history.
“Average pay has stagnated whilst top CEO reward has grown, despite overall slow economic growth and very variable business performance,” said Peter Cheese, chief executive of the CIPD.
He notes that excessive pay packages awarded by remuneration committees represents a significant failure in corporate governance and perpetuates an idea of a ‘superstar’ business leader.
“This imbalance does nothing to help heal the many social and economic divides facing the country,” he added.
A different view
Taking a different perspective, the Adam Smith Institute, a think tank, described the findings as “cod statistics”.
“Another year, another set of cod statistics on executive pay. If these activist organisations actually cared about workers — and not just the politics of envy against our best and brightest — they would talk about ways to actually increase worker pay,” said Matthew Leesh, head of research at the Adam Smith Institute.
“The only way to increase wages is by boosting productivity through innovation, cutting red tape, and making it easier for people to move for jobs.”
Leesh believes that limits on executive pay would drive “top British talent” and companies offshore, ultimately leading to fewer jobs and lower pay for workers.