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Leading or Lagging: where does the UK stand in the international debate about top pay?

New High Pay Centre report analysing the policy responses to excessive pay in different economies

UK lagging rivals in efforts to tackle executive pay

New analysis published by the High Pay Centre shows that the UK is falling behind its rivals in tackling inequality and high levels of executive pay.

Since the onset of the financial crisis, executive pay levels have caused widespread public outrage, as top pay has continued to increase, while the wages of ordinary workers stagnate.  The report comes amidst growing evidence that shareholder votes on executive pay are not reducing undeserved awards, after controversial pay packages at companies such as Barclays, Centrica and Shell were approved at recent company AGMs. 

The UK was one of the first countries to propose a shareholder vote, or ‘say on pay’ , but similar measures are now planned for most major economies.

The High Pay Centre report argues that ‘say on pay’ alone is ineffective, because voting is controlled by wealthy investment fund managers, who also benefit from a culture of high pay.

Thus far, the UK has rejected stronger measures undertaken by other countries.

The report also found that while there are over 400 people earning over £1 million at Barclays, a single UK bank, there are less than 300 executives paid a similar amount across the whole of Japan!

The importance of humility and solidarity in Japanese culture, and the stigma attached to greed and excess, means that Japanese executives traditionally make much lower pay demands than their British counterparts, despite the fact that there are more than twice as many Japanese corporations in the Fortune 500 list of the world’s biggest businesses.

High Pay Centre Director Deborah Hargreaves said: Our report highlights a number of ways that the Government could begin to tackle undeserved and socially-divisive levels of executive pay. The UK has historically led the world in standards of good corporate governance and responsible business practices, but we are now falling behind. This situation urgently needs correcting.

Any market that suggests there are more talented individuals working at Barclays than across the entire Japanese economy is clearly failing.’ 

Notes to editors:

Download report

Posted on 28 May 2013

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