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‘Fat cat’ bosses earn 117 times more than average worker

Written by: Paloma Kubiak
Executives at the UK’s 100 largest PLC’s raked in an average £3.46m – earning 117 times more than the average UK employee.

Calculations reveal it takes the average worker a whole year to earn the same amount (£29,574) a FTSE 100 CEO earns in just three working days.

In total, FTSE 100 CEOs were paid £2.08bn in 2018. But while the median pay packet dipped from £3.97m in 2017 to £3.46m in 2018, 43 companies increased the CEO pay in the last year and a number of CEO’s saw their multi-million pound reward packages more than double.

According to the CIPD and High Pay Centre’s annual review of FTSE 100 firms’ reports, they state that evidence to justify executive pay packages is “weak”.

The not for profit organisations note that executive pay is meant to “incentivise and reward longer term performance” but evidence suggests a “disconnect between CEO pay and performance”.

Shareholder returns shouldn’t be the only measure of success as outside factors such as government policy or stock market volatility can impact the pay.

As an example, Jeff Fairburn, CEO of house builder Persimmon was the highest paid FTSE 100 chief but his pay package was linked to a share price spike due to the announcement of the Government’s Help to Buy scheme.

The think tanks added that the gap between executive pay and the rest of the UK workforce is damaging and “may prove a reputational risk for companies” as it “contributes mistrust in business”.

As such, the CIPD and High Pay Centre recommend more transparent reporting on pay and performance, more emphasis on non-financial measures of performance and for committees to consider issues such as organisation culture and fairness when making pay decisions.

It also reported that FTSE 100 CEOs are more likely to be named Steve or Stephen than they are to be female. Further, while women make up 6% of the FTSE 100 CEOs, they earn just 4.2% of the total pay.

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