Senior executives in the UK’s top 100 companies took just 33 hours to be paid more than the typical worker’s annual salary, according to data that unions say should be a “source of national shame”. Figures released by the High Pay Centre thinktank showed that the typical FTSE 100 chief executive is paid 117 times…
Senior executives in the UK’s top 100 companies took just 33 hours to be paid more than the typical worker’s annual salary, according to data that unions say should be a “source of national shame”.
Figures released by the High Pay Centre thinktank showed that the typical FTSE 100 chief executive is paid 117 times more than the median worker, at £901.30 an hour or £3.46m a year.
It means that by 5pm on 6 January 2020, the chief executives of Britain’s largest listed businesses will have pocketed more than the £29,559 annual salary earned by the median full-time employee, who is taking home about £14.37 an hour.
Tim Roache, general secretary of the GMB union, said: “It should be a source of national shame that in just a handful of days, company fat cats will have made more money than the typical UK full-time worker will earn in the entire year.
“These empires are built on the back of hardworking staff, many of whom will be struggling to make ends meet.” he
The pay gap between executives and workers will come under additional scrutiny in the coming months, when individual companies with more than 250 staff will have to publish pay ratios between top earners and the rest of staff in their annual reports for the first time.
Peter Cheese, chief executive at the professional HR body the Chartered Institute of Personnel and Development (CIPD), which analysed pay data for the study, said: “Pay ratio reporting will rightly increase scrutiny on pay and reward practices, but reporting the numbers is just the start. We need businesses to step up and justify very high levels of pay for top executives, particularly in relation to how the rest of the workforce is being rewarded.
“Greater fairness and openness in pay is essential in building trust, amongst employees as well as external stakeholders and investors. Expectations on businesses behaving and acting responsibly are rising, and greater transparency around how they are treating and managing all their people is a vital part of building long-term sustainability.”
The High Pay Centre/CIPD report is based on 2018 data, in which the former Persimmon boss Jeff Fairburn was the highest paid after receiving £39m, plus a controversial £85m bonus. After Fairburn, the Royal Dutch Shell boss Ben van Beurden was the second highest paid chief executive with a total package of £17.8m.
The TUC said the latest pay gap figures strengthened an argument for raising taxes on top earners and ensuring staff were given seats on company boards.
Last month the union published a poll showing that 68% of voters – including the majority of those who voted Conservative – think that taxes should be raised for those earning more than £80,000 annually.
Frances O’Grady, TUC general secretary, said: “This tells you everything about how unfair our economy is. Every working person plays a part in creating Britain’s wealth. But people at the top are taking more than their share.
“There should be seats for workers on pay committees and company boards to stop fat cats taking more than their fair share. We also need a fairer tax contribution from those at the top, to help provide our public services the investment they need.”
Criticism of high executive pay comes despite a slight decline in the median executive’s remuneration, from £3.9m to £3.46m, which may fall further following a backlash over pension pay.
A number of the UK’s largest companies, including Britain’s five largest banks, have started to bow to investor pressure over bumper retirement benefits in recent months.
It comes after politicians, shareholders and City lobby groups agitated for pension payments to be brought in line with the rest of staff.
In November, Standard Chartered said it would halve the pension allowance of its chief executive, Bill Winter,, which was worth 40% of his salary, to £237,000 following a shareholder revolt at its AGM in May. Standard Chartered’s UK workers receive a pension worth on average about 10% of their pay.
Andrew Ninian, director of stewardship and corporate governance at the Investment Association, said: “Despite some good progress in the last year on executive pensions, shareholders want companies to ensure that their pay policies are justifiable.
“2020 is an important year, which will see the majority of companies seek shareholder approval for their remuneration policies for the next three years, and they will want to see that CEO pay is proportionate and aligned to performance.”