Britain’s top bosses will have made more money than an HR Director earns in an entire year by the end of this week.
In 2015, the High Pay Centre calculated that median FTSE 100 CEO pay in 2015 was £3.973million based on the publicly disclosed “single figure” measure. When taking into account the long hours CEOs work, and the few holidays they take, they are paid the equivalent of over £1,000 an hour.
High Pay Centre Director, Stefan Stern, comments: “We hope the government will recognise that further reform to pay practices are needed if this gap is to be closed. That will be the main point in our submission to the business department in its current consultation over corporate governance reform.”
In contrast, the ‘national living wage’ for over 25s is £7.20 an hour. Dubbed as ‘Fat Cat Wednesday’, by lunchtime today, remuneration of top company executives returning to work in 2017 will have surpassed the UK average salary of £28,200 by around mid-day today.
According to High Pay Centre calculations, the average pay ratio between FTSE 100 CEOs and the average total pay of their employees was 129:1.
Stern adds: “Our new year calculation is not designed to make the return to work harder than it already is. But ‘Fat Cat Wednesday’ is an important reminder of the continuing problem of the unfair pay gap in the UK.”
Evidently, more needs to be done to create transparency on the remuneration imbalance between staff, managers and top executives.
Ben Willmott, Head of Public Policy at the CIPD, comments on the effect this could have on staff: “This disconnect demotivates staff at work, with a recent CIPD study showing that six in ten (59%) employees identify CEO pay as an issue that demotivates them at work. The message from the workforce is clear: ‘the more you take, the less we’ll give’. Business leaders need to ensure there is a is a much clearer link between overall top pay, organisation performance and the rewards of the wider workforce or risk reducing employee engagement and productivity at work.”
The Association of Chartered Certified Accountants (ACCA) has released three New Year’s resolutions to create a fairer policy on pay. Their Head of Corporate Governance, Jo Iwasaki, explains: “Business leaders have an opportunity to set a new tone from the top at the beginning of 2017. By adopting these resolutions, business leaders can help move UK corporate culture on to a more transparent and sustainable footing.
“ACCA research has previously found that our members rank ‘tone at the top’ as having the strongest influence on corporate culture in an organisation.”
The three tips can be seen on the following page...