Pay for FTSE 100 CEOs soars to ‘160 times that of average worker’
Government rules to curb disproportionately high levels of executive pay have failed to bring remuneration down to “sensible” figures, according to research from the High Pay Centre (HPC).
In its study of senior remuneration at FTSE 100 firms, the think tank found that median pay for chief executives stood at £3.9 million in 2013, up from £3.8 million in 2012.
However, reward for some senior executives could rise further still in 2014 with analysis of employer’s future pay policies suggesting median pay expected for ‘maximum performance’ could be £4.9 million, while reward for ‘on target’ performance could be lower at £3.1 million.
The HPC said that rules to reduce top pay introduced by the government in 2013 “did not appear to have had a significant effect in terms of reducing executive pay packages”. It called requirements for firms to publish comparisons between the chief exec’s pay increases and rises given to the rest of the workforce as “next to useless”.
This is because companies can choose a relatively small group of employees salaries to compare to their chief exec’s, which may not reveal the true pay ratio in the firm.
The HPC also said that evidence showed that binding shareholder votes on future remuneration “will not trigger a move towards lower levels of CEO pay more closely related to incomes across the economy” because they were “generally approved by a large margin of over 90 per cent”.
“Thirty-two out of the 67 [of the FTSE 100 firms] increased their CEO’s pay. [And] while shareholder votes against pay packages at companies like Astra Zeneca and Barclays attracted considerable media attention, these were advisory votes on pay awards rather than binding votes on pay policy,” it said.
High Pay Centre director Deborah Hargreaves said: “These figures show that the new regulations are not enough to bring top pay back to a level that is sensible, fair or proportionate. Over the past 15 years, pay for a FTSE 100 CEO has gone from being 60 times the average UK worker to 160 times, without any justification. All workers should share in a company’s success - our economy cannot succeed in the long-term if a tiny group at the top pull further and further away from everybody else.”