FTSE 100 chief executives ‘earn average salary within 3 days’
Bosses of Britain’s biggest companies will earn more in the first three days of this week than the average worker’s annual wage, research claims. By 17:30 GMT on Wednesday, the pay of FTSE 100 chiefs will have overtaken the £31,461 annual median wage for full time workers, the High Pay Centre says.
Bosses’ pay was flat last year, while average wages generally rose slightly. That meant that FTSE chief executives had to work 34 hours to beat median annual pay, not the 33 hours in 2020.
The High Pay Centre think-tank based its annual calculations on analysis of disclosures in companies’ annual reports, combined with government statistics. High Pay Centre director Luke Hildyard said chief executive pay is about 120 times that of the typical UK worker, up significantly from two decades ago.
“Estimates suggest it was around 50 times at the turn of the millennium or 20 times in the early 1980s,” he said. “Factors such as the increasing role played by the finance industry in the economy, the outsourcing of low-paid work and the decline of trade union membership have widened the gaps between those at the top and everybody else over recent decades.”
He said the figures should raise concern about the governance of Britain’s biggest companies. “They should also prompt debate about the effects that high levels of inequality can have on social cohesion, crime, and public health and wellbeing,” he said.
Median FTSE 100 chief executive pay was £3.61m in 2019, the last year for which a full set of data is available, the High Pay Centre said. The centre said its analysis was based on chief executives’ average working day being 12 hours.
However, critics said such analysis just fuels the politics of envy without looking at why chief executives matter and the contribution they make. Daniel Pryor, head of programmes at the Adam Smith Institute, said: “Good management is more important than ever in a globalised world and small differences in top talent make a big impact on a business’ bottom line.
“That bottom line makes a big difference to workers across the UK, anyone with a private pension, and shareholders.”
He pointed out that there is strong, if morbid, evidence about chief executive deaths that shows why the corporate and investment world believe leadership makes a huge difference to the fortunes of their companies. “In the past 60 years, unexpected CEO deaths have consistently affected stock price, profitability, investment and sales growth – for better or worse,” he said, adding: “Which is why it makes sense for firms to open their wallets to attract the best talent.”