Top executives at some of the UK’s biggest firms earned more in the first week of 2017 than most people will in the entire year.
The Fat Cat Wednesday report took the median salary of FTSE 100 chief executives (£3.973m) and calculated that they would have earned more than the UK national average wage of £28,400 by midday on 4 January. It was also found that in 2015 there was a pay ratio of 129:1 between FTSE100 CEOs and the average total pay of employees.
Last year the UK government launched a consultation to try to improve corporate governance. This follows the storm caused by former BHS chairman Sir Philip Green, who faced criticism for allowing the retailer to put thousands of employees’ pensions at risk. The green paper will look at whether companies should be forced to reveal the gap in earnings between CEOs and their average employees.
Business Secretary Greg Clark said last year that the proposals would help CEOs to be paid in line with performance, while Prime Minister Theresa May said she hopes the new measure will ensure that everybody plays by the same rules while increasing the public’s trust in businesses. The High Pay Centre is set to submit its report findings to the government highlighting the continuing problem of the unfair pay gap in the UK.
A study by Lancaster University Management School of FTSE 350 companies also found the link between pay and performance to be negligible. The report’s authors said the wage packets of the 350 chief executives of Britain’s leading companies have risen 82 per cent in 13 years, while the return on money invested has been just one per cent.
They also discovered that pay increases since 2003 were largely the result of performance-related bonuses and warned that measures generally used by companies to determine performance placed excessive emphasis on short-term results.
The management school highlighted the top 10 salaries earned by FTSE 100 chief executives in 2015:
1. Sir Martin Sorrell, WPP – £70.4m
2. Tony Pidgley, Berkeley Group – £23.3m
3. Rakesh Kapoor, Reckitt Benckiser – £23.2m
4. Jeremy Darroch, Sky – £16.9m
5. Flemming Ornskov, Shire – £14.6m
6. Bob Dudley, BP – £13.3m
7. Erik Engstrom, RELX – £10.9m
8. Mike Wells, Prudential Financial – £10m
9. Michael Dobson, Schroders – £8.9m
10. Antonio Horta Osorio, Lloyds Group – £8.8m
Theresa May has ruled out ordering companies to put a worker on their boards, as in Germany, although it is believed that she may still decide to mandate worker representation on the committees of top companies that agree the rewards for CEOs.
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