5th January 2016
Top bosses will already have made more money by the first Tuesday of 2016 than the typical UK worker will earn all year, claims think tank The High Pay Centre (HPC).
On 5 January dubbed, Fat Cat Tuesday, big bosses’ pay will surpass the average full-time UK worker’s annual salary after just two days according to the campaigner.
Its calculations show that earnings for company executives returning to work in the New Year will have passed the UK average salary of £27,645 by late afternoon on Tuesday.
It noted that FTSE 100 chief executives are paid an average £4.96m a year.
It found that even if CEOs are assumed to work long hours with very few holidays, this is equivalent to hourly pay of more than £1,200.
HPC highlighted that the typical value of a FTSE 100 CEO’s incentive award has risen by nearly 50% of salary since the previous year, according to the latest Manifest MMK pay survey, while the annual pay of the average UK worker has increased by just £445, from £27,200 to £27,645.
It said that the figures would raise doubts about the effectiveness of government efforts to curb top pay by giving shareholders the power to veto excessive pay packages.
It has argued that further measures are necessary, such as representation for ordinary workers on the company remuneration committees that set executive pay, and publication of the pay gap between the highest and median earner within a company.
HPC director Stefan Stern said: “‘Fat Cat Tuesday’ again highlights the continuing problem of the unfair pay gap in the UK.
“We are not all in this together, it seems. Over-payment at the top is fuelling distrust of business, at a time when business needs to demonstrate that it is part of the solution to harsh times and squeezed incomes, and is promoting a recovery in which all employees can benefit.”
Commenting on the increasing pay gap between the average FTSE 100 CEO and the typical worker, Andrew Tyrie MP and chairman of the Treasury Committee, said: “High quality chief executives are worth a great deal. Success should be fully rewarded.
“But failure should be penalised. Shareholders don’t do enough to distinguish between the two. As a result, some boards have been rewarding poor performance, and even failure, with high pay and bonuses and sometimes high exit pay-offs.
“A good deal of work is being done in an effort to remedy this in financial institutions, particularly banks, triggered by the crash. This is work in progress. “More attention on the rest of the corporate sector is now also needed. This will be a crucial part of entrenching the recovery. Success should have its full reward, failure its penalty.”