One Law for them: How big companies flout rules on executive pay
New High Pay Centre research suggests top companies are ignoring rules requiring them to relate executive pay to pay for ordinary workers
A new report from the High Pay Centre published this week shows how the UK’s biggest companies are ignoring rules on executive pay.
The Large and Medium Size Companies Regulations and the Corporate Governance Code require UK listed companies to show how they took pay and conditions for all employees into account when setting executive pay.
This is intended to stop top bosses grabbing an unfair share of the rewards for companies success and prevent the pay gap between the super-rich and ordinary workers from widening.
However, our research found that FTSE 100 Companies are flouting these regulations
- 84 FTSE 100 Companies fail to provide any evidence of how executive pay compares to pay for ordinary workers across the company
- The remaining 16 companies do commit to increasing workers’ pay in line with executive salaries – however salaries only account for about 20% of the typical executive pay package, with the vast majority of their pay taking the form of bonus or incentive payments. Therefore, tying workers’ pay to executive salaries still leaves room for pay at the top to massively outpace pay growth for ordinary employees
As a result of the failure of these regulations, FTSE100 CEO pay has increased from 47 times the pay of their average employee in 1998 to 133 times in 2012.
The High Pay Centre report calls for all companies to publish the pay ratio between their CEO’s pay and that of their lowest paid employee. This would ensure full transparency for shareholders and the general public on the widening pay gap between CEOs and their workers.
Since 1 January 2018 the average FTSE 100 CEO has earned:
Income inequality in the UK
Wealth inequality in the UK
- Are Chief Executives overpaid? Blog by HPC founder Deborah Hargreaves
Author of new book on top pay calls for a new corporate ethos - contact HPC to attend the launch on 11 October
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- HPC response to consultation on the Wates Principles for the governance of privately-owned companies
Large private companies should be subject to the same high standards of stakeholder engagement as publicly-listed counterparts