Friday 4 January 2019 has been dabbed “Fat Cat” Friday as, in just three working days, the UK’s top CEOs earn more than what a typical full-time worker will earn in a year, new calculations have found.
Data from independent think tank the High Pay Centre and the CIPD found that the average FTSE 100 CEO has a median pay packet of £3.9m, and only needs to work until 1pm today (Friday 4 January 2019) to earn the same annual gross salary as an average worker of £29,574.
The £3.9m figure was calculated by the CIPD and the High Pay Centre in their 2018 analysis of top pay and it marks an 11 per cent increase on the £3.5m figure reported in their 2017 analysis. The pay increase means that FTSE 100 CEOs, working an average 12-hour day, will only need to work for 29 hours in 2019 to earn the average worker’s annual salary, two hours fewer than in 2018.
Commenting, CIPD chief executive Peter Cheese: “There is still far too great a gap between top earners and the rest of the workforce. 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 endeavor and reward should be shared more fairly. This imbalance does nothing to help heal the many social and economic divides facing the country.”
The CIPD and High Pay Centre are calling for 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 measure of performance.
High Pay Centre director Luke Hildyard labelled excessive executive pay a “massive corporate governance failure”, citing it as a barrier to a fairer economy.
“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,” he said.
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