Despite a drop of almost a fifth in the pay of FTSE 100 CEOs in 2016, research has found that it would still take the average worker 160 years to earn what they are paid in just one year. 

The research, carried out by the Chartered Institute of Personnel and Development (CIPD) and the High Pay Centre, also found that: 

  • The pay ratio between CEOs and their employees in 2016 was 129:1, a drop from 148:1 in 2015
  • 60 of the FTSE 100 CEOs were paid more than 100 times the typical annual pay of a UK worker which currently stands at £28,000 per year (mean earnings)
  • Just over a quarter of the FTSE 100 companies are accredited by the Living Wage Foundation for paying the voluntary living wage to all their UK-based staff, despite the generous pay packages of their CEOs
  • There are just six female FTSE 100 CEOs 

The analysis also showed how the gap between the highest and lowest pay packages has narrowed as companies “chase the median”, which currently stands at £3.45 million. So although the pay packages of the 25 highest paid CEOs dropped to £9.4 million in 2016, the 32 lowest paid enjoyed an increase, prompting the CIPD and High Pay Centre to warn that this trend of “chasing the median” also requires government attention. 

In order to bring about fairer and more ethical approaches to pay and reward, the CIPD and High Pay Centre recommend that: 

  • Companies should publish the ratio between the pay of their CEO and median pay in their organisations within the context of their overall reward strategy
  • Companies should ensure they have employee representation on their remuneration committee
  • Companies should establish a “human capital development” sub-committee to focus on all aspects of people, culture and organisation to provide better insight and guidance on the board and beyond
  • The government should set voluntary workforce reporting standards to encourage all publicly listed organisations to provide better information on how they invest in, lead and manage their workforce over the long-term

Gerard Airey of Thompsons Solicitors said “The outcome of the research by the CIPD is astounding. It shows the disparity between the average worker and those at the top of companies and it is alarming that there are only 6 female FTSE 100 CEOs. Hopefully this research will be looked at seriously so that these issues are monitored and addressed.” 

Click here to read the full report.