Executive pay 117 times higher than average employee

Despite pay cuts, chief executives continue to earn 117 times more than the average full-time employee in the UK, a new report has found.

Executive pay 117 times higher than average employee

An annual review of FTSE 100 firms, conducted by the CIPD and the High Pay Centre, revealed that CEO pay has fallen £3.46 million in 2018, but it’s too early to know whether this is the start of a downward trend. Nevertheless, 43 companies have increased CEO pay in 2018 and many CEOs saw their million-pound reward packages more than double. The report found that evidence to justify these executive pay packages is weak.

The report also found that a boss of one of the UK’s largest listed 100 companies earns £3.5m a year on average, contrastingly, the average British person working full time earns £29,574.



The review also revealed a continued large gender gap at the top of big firms. In 2018, only six of the FTSE 100 companies had a female boss, down from seven in 2017.

CIPD chief executive, Peter Cheese, said the gap between pay at the top and bottom of firms remained “unacceptably wide”.

He added: “We must question if CEOs are overly focused on financial measures and are being incentivised to keep share prices high rather than focusing on the long-term health of their business.”

High Pay Centre director, Luke Hildyard, said: “There is still more to be done to align pay practices with the interests of wider society. It’s important to give the public confidence that our biggest businesses are working for the good of the economy as a whole, rather than the enrichment of a few people at the top.”

The CIPD and High Pay Centre have made a number of recommendations which include the public disclosure of the pay of the top 1% earners, for workplaces to consider workforce reward practices, and for companies to foster understanding of organisational culture, fairness and investment in people.

They also suggested that chief executive pay should be linked to both financial and non-financial measures of performance, chief executive reward packages should be simplified and linked to fewer, more meaningful measures of performance.

The study also looked at pay in the FTSE 250 companies for the first time. These are the 250 largest firms listed on the stock exchange after the FTSE 100 firms. It found that, in contrast to FTSE 100 pay, the salaries of chief executives in the 250 group had stayed somewhat steady. Pay averaged £1.58m in 2016 and 2018 with a 2% rise to £1.61m in 2017.

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