CEOs from FTSE 100 companies made the same amount of money as the average worker’s salary in the first three working days of 2020, new research has revealed.
Data from the Chartered Institute of Personnel and Development (CIPD) and the High Pay Centre think tank shows that those CEOs who started work on 2 January will have earned more than the average wage of £29,559 by the close of business on 6 January 2020.
Available information suggests that, on average, a CEO from a FTSE 100 business was paid £3.46 million in 2018, a rate of more than £901 an hour; meanwhile, the average full-time salary in the UK works out at £14.37 an hour, which translates to FTSE 100 chiefs earning approximately 117 times more than the average employee.
The CIPD’s report says that high pay will be a key issue this year given that it is the first time that publicly listed firms with more than 250 UK employees have to disclose the ratio between pay of CEOs and the average worker.
Changes under the Companies Act (2006) mean businesses have to provide CEO pay ratio figures along with a supporting narrative to explain the reason for executive pay ratios.
Both the CIPD and High Pay Centre have urged businesses not to treat the new requirements as a ‘tick-box’ exercise and instead use it to fully explain pay levels of CEOs.
It is, both say, important in the process of building trust in business.
Peter Cheese, Chief Executive at the CIPD, commented: “This is the first year where businesses are really being held to account on executive pay.
“Pay ratio reporting will rightly increase scrutiny on pay and reward practices, but reporting the numbers is just the start.
“We need businesses to step up and justify very high levels of pay for top executives, particularly in relation to how the rest of the workforce is being rewarded.
“Greater fairness and openness in pay is essential in building trust, amongst employees as well as external stakeholders and investors.
“Expectations on businesses behaving and acting responsibly are rising, and greater transparency around how they are treating and managing all their people is a vital part of building long-term sustainability.”