Remuneration | Fat Cat Friday: Top bosses have already earned what the average worker makes in a YEAR

Fat Cat Friday: Top bosses have already earned what the average worker makes in a YEAR

By early afternoon today, the average FTSE 100 CEO will have already been paid what it will take a typical UK worker an entire YEAR to earn, according to research from the High Pay Centre and the CIPD.

The average full-time worker in the UK earns a gross annual salary of £29,574, but a FTSE 100 CEO on an average pay packet of £3.9million only needs to work until 1pm on Friday 4 January 2019 to earn the same amount. As a result, today has been nicknamed ‘Fat Cat Friday’.

Peter Cheese, Chief Executive of the CIPD, has warned that there is still far too great a gap between top earners and the rest of the workforce. He explained:

“Average pay has stagnated whilst top CEO reward has grown, despite overall slow economic growth and very variable business performance.”

“Excessive pay packages awarded by remuneration committees represent a significant failure in corporate governance and perpetuate the idea of a ‘superstar’ business leader when business is a collective endeavour and reward should be shared more fairly. This imbalance does nothing to help heal the many social and economic divides facing the country.” 

Luke Hildyard, Director of the High Pay Centre, said that businesses need to improve. “Excessive executive pay represents a massive corporate governance failure and is a barrier to a fairer economy,” he said.

“Corporate boards are too willing to spend millions on top executives without any real justification, while the wider workforce is treated as a cost to be minimised. To raise living standards, we need growth and innovation, but also to ensure that growth is fairly distributed. CEO pay packages 133 times the size of the average UK worker suggest we could do a lot better in this respect.”

The CIPD and High Pay Centre are calling for remuneration committees (RemCos) to ensure that CEO pay is aligned more appropriately to rewards across the wider workforce, and that their contribution is measured on both financial and non-financial measures of performance.

They recommend that this includes measures such as employee well-being and investment in workforce training and development – all of which are crucial for good corporate governance.

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“Stakeholders of all kinds, including many shareholders, are looking for significant shifts in corporate cultures and behaviours,” Cheese added. “Evolving the RemCo to become a broader people and culture committee would help boards focus on and gain deeper understanding of the organisational, cultural, and people aspects of their business, and the opportunities and risks they pose.

“By better reflecting the value, contribution, diversity and well-being of our workforces in corporate governance and reporting, we can help restore trust in business and drive better business outcomes for everyone,” he concluded.

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Comments (2)

  • Sir
    Fri, 4 Jan 2019 5:38pm GMT
    Do not worry, Mr Cheese made many millions at Arthur Andersen and Accenture and therefore what he considers excessive executive pay will probably not cover many of the FTSE 100.
  • Sir
    Fri, 4 Jan 2019 1:10pm GMT
    This is just free market economics - you have to pay an attractive salary if you want to secure top talent, especially in a competitive market. Internationally mobile, global executives are at a premium and we cannot just put our heads in the sand.

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