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CEOs earning 143 times more than company averages, pay study shows
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The bosses of Britain's 100 biggest listed companies are earning on average 143 times more than their staff, according to data that exposes the growing imbalance between how the nation's workforce and its business leaders are rewarded.
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The pay gap is widest at Rangold Resources, where boss Mark Bristow was paid £4.4m last year, nearly 1,500 times that of his average employee, many of whom work in the company's African mines. The study, published today by the High Pay Centre, also singles out marketing giant WPP and the retailer Next, both companies with large British workforces.
WPP founder, Sir Martin Sorrell, received nearly £30m last year, 780 times the £38,000 earned by his average worker. At Next, Lord Wolfson received £4.6m, while his staff, most of whom work on the shop floor, typically took home £10,000 – about 459 times less than their boss. The disparity at Next would have been greater had Wolfson not chosen to waive a £3.8m bonus and share the sum among the company's 20,000 staff.
At Compass Group, which employs many cooks, cleaners and security officers, the average £13,000 annual salary is among the lowest in the FTSE 100 index of Britain's biggest listed companies. But chief executive Richard Cousins took home £5.5m last year – 418 times more than his workers.
The gap is widening, according to the High Pay Centre. In 1998, a FTSE 100 boss was typically paid 47 times more than their workers. Analysis of six major UK companies in 1980 found the senior executive was paid between 13 and 44 times more than their staff.
"When bosses make hundreds of times as much money as the rest of the workforce, it creates a deep sense of unfairness," said High Pay Centre director, Deborah Hargreaves. "Britain's executives haven't got so much better over the past two decades. The only reason why their pay has increased so rapidly compared to their employees is that they are able to get away with it.
"The government needs to take more radical action on top pay to deliver a fair economy that ordinary people can have faith in."
The typical FTSE 100 chief executive was paid £4.7m in 2013, according to pay consultancy Manifest/MM&K, an increase from £4.1m the year before. The typical FTSE 100 employee earned around £33,000.
When measured against the average UK annual earnings, which stood at £27,000 last year according to government data, the comparison is even more stark – the top 100 executives earn 174 times more.
The arrival of contract security group G4S in the FTSE 100 in 2007 had a dramatic impact on pay figures. Wages at G4S were so low that the average salary at Britain's biggest companies fell from £31,000 to £26,000.
A decade before, in the late 1990s, FTSE 100 chief executives took home around £1m a year, 60 times the average annual earnings in Britain. By then, high pay was already the subject of heated debate.
In 1994, trade unionists grabbed headlines by bringing an 18-stone saddleback pig to the British Gas annual meeting, where it was fed treacle-covered £5 notes to demonstrate against a 75% pay rise for chief executive Cedric Brown.
That year, Brown's £475,000 in pay caused a national outrage but 18 years later, in 2012, Sir Frank Chapman earned nearly £6m in his final year running BG Group, the successor company to British Gas. Government statistics released this month showed wages fell for the first time since the 2009 recession during the April to June quarter this year. Pay, including bonuses, fell by 0.2%, despite a fall in the jobless rate.
Measures to curb executive pay were introduced by business secretary Vince Cable last year. Companies must now publish in their annual report a clear single figure for how much their senior executives earn each year, and shareholders have been given binding votes on pay.
But campaigners are demanding more radical measures to tackle the widening gap between the UK's select group of well rewarded executives and its 30 million-strong labour force.
Wilson called for worker representation on company boards and remuneration committees, a legally binding target for a reduction in inequality, and the introduction of a maximum pay ratio. At the retailer John Lewis, the ratio is capped at 75:1. At TSB bank, it is 65:1.
A spokesman for the Department for Business, Innovation and Skills said: "The government has introduced comprehensive reforms to give shareholders more powers in order to restore the link between top pay and performance, which in recent years has become excessive and increasingly disconnected.
"In October 2013 new laws reforming the governance of top pay came into force, boosting transparency by arming shareholders with more information and giving them the power to hold companies to account.
"Business secretary Vince Cable also wrote to all the members of the remuneration committees back in April urging restraint, and while we will need to wait until the end of the [annual meeting] season before we can reflect on the full impact of these actions, many firms have already seen top pay voted down."
