FTSE 100 CEO paid 129 times more than average UK worker
CIPD calls for high pay to be addressed as part of a much broader UK corporate governance review.
Political pressure and hostile public opinion have seen the pay packets of the average FTSE 100 CEO drop by 17% over the last year – although they are still paid 129 times more than the average UK worker.
The analysis conducted by HR body the Chartered Institute of Personnel and Development (CIPD) and independent think-tank the High Pay Centre also revealed that women make up 6% of FTSE 100 CEOs but earn only 4% of the total pay bill.
Males earned on average £4.7 million last year compared with just £2.6 million for women, bringing the overall average down to £4.5 million. This means it would take the average UK full-time worker on a typical mean income of £28,000 per year 160 years to earn what the average FTSE 100 CEO gets in a single year.
Peter Cheese, the CIPD’s chief executive, said: “The fall in executive pay is a step in the right direction, but it’s still happening within an overall reward system where average wages in the UK have been flat.”
As a result, he believes that: “High pay must be addressed as part of the much broader review of UK corporate governance.” Rather than focus on company share prices or short-term profit, Cheese advised introducing “a much more balanced scorecard for performance that also takes account of other indicators of success such as investment in people, social responsibility and accountability, and long-term value creation.”
The analysis also highlighted that the gap between the highest and lowest pay packages of the FTSE 100 CEOs had closed as companies “chase the median”, which is currently £3.45 million. The 25 highest paid CEOs have seen their renumeration drop by 24% to £9.6 million in 2016, while the 32 lowest paid saw theirs’ rise.
Stefan Stern, director the High Pay Centre, said: “We should beware the ratcheting up of pay lower down the FTSE league table as CEOs and renumeration committees ‘chase the median’. This helps nobody but a few lucky top execs.”
As a case in point, only just over a quarter of FTSE 100 companies are accredited by the Living Wage Foundation for paying the voluntary living wage to all of their UK-based staff.