Blue-chip bosses in UK earn 183 times more than other employees
Britain’s top companies have a widening pay gap between bosses and average workers, according to a new report.
The High Pay Centre pressure group has revealed that the average FTSE 100 chief executive earns 183 times more than employees lower down the scale. What's more, although the FTSE 100 shrank by 3% in 2014 average executive remuneration increased.
Using figures from the company reports on the UK’s largest firms, The High Pay Centre found that a chief executive’s average total pay hit £4.964m in 2014, up from £4.923m in 2013.
In contrast, according to the Office for National Statistics the average worker in the UK economy earned £27,200 in the same period.
In 2014, Sir Martin Sorrell of WPP was awarded a total package worth £43m and took the top place in the high earners’ chart, with Ben van Beurden of Royal Dutch Shell coming in second with £19.5m and Erik Engstrom of Reed Elsevier in third place with £16.2m.
Failure of governance
The High Pay Centre’s director, Deborah Hargreaves, said the situation reflects a failure of corporate governance because rising rewards for top executives are not always matched with the performance of the companies under their stewardship.
“Pay packages of this size go far beyond what is sensible or necessary to reward and inspire top executives. It’s more likely that corporate governance structures in the UK are riddled with glaring weaknesses and conflicts of interest,” she said.
Previous Business Secretary Vince Cable introduced legislation that compels companies to hold a binding vote at least every three years on future pay policy. This year, some shareholders also voted against high remuneration packages, including those at Burberry, HSBC and Wm. Morrison Supermarkets.