On the first Thursday of 2018, the average FTSE100 CEO will have already been paid what it will take the typical UK worker all year to earn
- Modest restraint by company boards saw FTSE 100 CEO pay fall last year but the pay gap between the top and average worker remains wide
- New era of transparency through pay ratio disclosure will keep up pressure on remuneration committees to check and challenge CEO pay levels and performance
Thursday 4 January 2018 is ‘Fat Cat’ Thursday. In just three working days, the UK’s top bosses will have made more money than the typical UK full-time worker will earn in the entire year. This is according to calculations from independent think tank The High Pay Centre, and the CIPD, the professional body for HR and people development.
The figures show that pay for top executives will pass the median UK gross annual salary of £28,758 for full-time employees on Thursday 4 January 2018.
The CIPD and The High Pay Centre’s calculations come after a year which saw the mean FTSE 100 CEO pay packet fall by a fifth, down from £5.4m million to £4.5 million (2016 figures, as published in 2017). FTSE 100 CEO median pay also fell to £3.45 million in 2016 (down from £3.97m in 2015). However, despite this year-on-year reduction in total pay among FTSE 100 bosses, the ratio of CEO pay to the pay of the average full-time worker stands at 120:1.
The High Pay Centre and the CIPD are working together to ensure that high pay is addressed as part of a much broader review of corporate governance in the UK, including greater transparency on workforce data.
Peter Cheese, chief executive of the CIPD, said:
Stefan Stern, director of the High Pay Centre, said:
Charles Cotton, Senior Reward and Performance Adviser at the CIPD, said:
Previous CIPD research has shown that excessive CEO pay can have a damaging effect on the workforce. In its 2015 research report ‘The view from below: What employees really think about their CEO’s pay packet’, a CIPD survey of more than 1000 working adults found that:
- 71% agreed that CEO pay levels in the UK are generally too high
- 60% agree that CEO pay levels in the UK demotivate employees
- 54% agree that CEO pay levels in the UK are bad for an organisation’s reputation
As part of efforts to enhance trust in business and improve corporate governance in the UK, the CIPD and High Pay Centre recently welcomed the Government’s corporate governance reforms and the Financial Reporting Council’s proposals for a revised UK Corporate Governance Code. As part of the Government’s reforms, new laws will require around 900 listed companies to annually publish and justify the pay ratio between chief executives and their average worker.
The reforms also include the introduction of the world’s first public register of listed companies where more than a fifth of investors have objected to executive annual pay packages. The first public register was published by the Investment Association on December 19 2017 and includes more than a fifth of the FTSE 100. Companies on the register include fashion label Burberry, retailers Sports Direct and Morrisons, broadcaster Sky and the advertising company WPP.
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