Pay for bosses at the UK's biggest firms is rising five times faster than workers' pay
PUBLISHED: 08:57 15 August 2018 | UPDATED: 08:57 15 August 2018
The "shocking excess" of Britain's boardrooms has been revealed in a report which shows company chief executives have had an 11% pay rise in the past year.
Despite criticism from investors over excessive payments, the median salary for chief executives is now just under £4m.
The rise compares to a 2% increase in pay for full-time workers.
The research by the Chartered Institute of Personnel and Development (CIPD) and the High Pay Centre looked at the pay packets of FTSE 100 company bosses.
Using the mean measure, which is more affected by this year’s substantial payouts to chief executives (CEOs) at Persimmon and Melrose Industries, pay rose by 23% to £5.6m, the report said.
Women make up 7% of FTSE 100 chief executives but earn 3.5% of total pay, said the report.
Peter Cheese, chief executive of the CIPD, said: “Despite increased investor activism and the planned introduction of pay ratio reporting, the evidence suggests that very little is changing when it comes to top pay in the UK.
“It’s disappointing to see that CEO pay has held up in the face of increasing pressure when average pay across the workforce has barely shifted in recent years.
“Given the ongoing issues of trust in big businesses and a push for greater transparency, it really is time businesses and boards put greater scrutiny on high pay, and that they think much more objectively about what they are rewarding CEOs and how.”
Rachel Reeves, who chairs the Business, Energy and Industrial Strategy Committee, said government may need to “step in” if businesses and boards did not address the issue of over-inflated salaries.
“Excessive executive pay undermines public trust in business. When CEOs are happily banking ever larger bonuses while average worker pay is squeezed, then something is going very wrong.
“Recent revolts on pay awards show that shareholders are increasingly sharing this frustration at unjustifiable pay awards. Executive pay must match performance,” she said.
Luke Hildyard, director of the High Pay Centre, said: “It is deeply unsettling that such a substantial pay gap remains between CEOs and ordinary workers.
“Big CEO pay increases reflect poorly on corporate culture and accountability and suggest that bolder reforms to corporate governance may be needed. In this light, the weakening of plans to give workers representation on company boards could be misguided.”
Tim Roache, GMB General Secretary, said: “These figures expose shocking excess in UK company boardrooms.
“The fact that FTSE 100 CEO pay is rising five times faster than average wages is a badge of national shame.”
A Business Department spokesman said: “While most companies get their responsible business practices right, we understand the anger of workers and shareholders when bosses’ pay is out of step with company performance.
“That is why as part of our corporate governance reforms, the UK’s largest companies now have to ensure employees’ interests are represented in the boardroom and annually publish and explain the pay ratio between senior management and the workers.”