Research by the High Pay Centre (HPC) has found that the median pay in 2022 of FTSE 100 chief executives was a staggering 118 times higher compared to that of the median UK full-time worker. In 2021, it was 108 times higher and in 2020, it was 79 times higher.
The analysis also found that FTSE 350 firms spent over a billion on executive pay, with £1.33 billion awarded to 570 executives. Although the average bonus size fell slightly from £1.43 million in 2021 to £1.41 million in 2022, the average long term incentive plan payment increased from £1.50 million to £1.79 million.
As the HPC report points out, it is hardly “desirable or sensible” for companies which include some of Britain’s biggest employers to prioritise pay rises in the region of half a million pounds for executives who are already multi-millionaires when so many households are struggling with their day to day living costs.
Yet many of the board members and investors who set executive pay argue that these multi-million pound pay awards are too low. For instance, the chief executive of the London Stock Exchange claimed earlier this year that UK CEOs were not well-paid by international standards and that this represented a long-term risk for the UK economy, in terms of attracting sufficiently capable business leaders.
The High Pay Centre is calling for reforms to regulations affecting the corporate pay-setting process including:
- Requirements for companies to include a minimum of two elected workforce representatives on the remuneration committees that set pay.
- Guaranteed trade union access to workplaces to tell workers about the benefits of union membership and collective bargaining.
- Requirements for companies to provide more detailed disclosure of pay for top earners beyond the executives including indirectly employed workers, enabling more informed pay negotiations at individual companies and a clearer debate about pay inequality more generally.
- New bodies should be established for unions and employers to negotiate across sectors, beginning with hospitality and social care.
- Phasing out long-term incentive payments and replacing them with mechanisms like profit shares, common to all staff ensuring that everyone who contributes towards a company’s success benefits from it.
The Centre carried out the research into the FTSE 100 and FTSE 250 cohort as at June 2022 and analysed the information published in their annual reports for their financial year ending in 2022.
Read the report in full here.