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Latest NewsExecutive payPay structures

Executive pay ratios widen, as inequality persists

by Jo Faragher 18 Dec 2023
by Jo Faragher 18 Dec 2023 The ratio between FTSE bosses' pay and median to lower-earning workers is widening
Shutterstock
The ratio between FTSE bosses' pay and median to lower-earning workers is widening
Shutterstock

The difference in median pay between chief executives in the FTSE 350 and other employees was 57:1 in 2022, according to analysis from the High Pay Centre.

The centre found that pay inequalities remained constant despite the high cost of living and having narrowed slightly during the pandemic, with the 57:1 ratio up slightly from the year before (56:1).

The median gap between CEOs and their lowest-paid quarter of employees fell slightly in 2022 to 75:1 from 78:1 in 2021, however.

Across FTSE 100 companies, the gaps were wider, with a median CEO to median employee pay ratio of 80:1 and a median CEO to lower quarter employee of 118:1.

The High Pay Centre found that more than a fifth of FTSE 350 companies had a CEO to median employee ratio of more than 100:1, and 3% had a ratio of 200:1. Thirty-five per cent had a CEO to lower-quarter employee ratio of over 100:1, and 7% of 200:1.

Executive pay ratios

Average FTSE 100 CEO pay highest since 2017

‘Pay UK bosses more’, urges London Stock Exchange chief 

Opinions of high pay ratios are not positive, however. More than three-quarters (76%) of people polled previously by the centre said they thought top-earners should not be paid more than 20 times their low and middle-earning colleagues.

Publicly listed companies began reporting mandatory executive pay ratio reports in early 2020 after the regulations were first published in 2018.

The High Pay Centre said the reporting mechanisms were not perfect, but that reporting requirements offered the only “consistent, comparable” data on pay differentials available to investors, workers and other stakeholders.

Its latest report recommends that:

  • Companies provide more detailed information of how many jobs there are at different levels;
  • Outsourced workers, who often perform low-paid work, are included in calculations; and
  • Companies communicate pay ratio information directly to their workforce, in addition to publishing the data in their annual report.

High Pay Centre director Luke Hildyard said: “We need a fairer, more equal, more inclusive economy where companies create lots of well-paid jobs for all their workers, rather than a handful of obscenely paid roles for those at the top.

“The pay ratio trends highlight a moment of solidarity during the pandemic when CEO to employee pay gaps narrowed, but that seems to have been lost as gaps have widened to pre-pandemic levels over the subsequent two years.”

The High Pay Centre predicted last year that pay ratios would widen again – company bosses had shown sensitivity to treating workers fairly during Covid, but the “spirit of solidarity” would likely fade, it said.

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The companies with the widest CEO to employee pay ratios were BP, JD Sports and software company Darktrace. At BP, the CEO to lowest quartile employee ratio was 421:1.

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Jo Faragher

Jo Faragher has been an employment and business journalist for 20 years. She regularly contributes to Personnel Today and writes features for a number of national business and membership magazines. Jo is also the author of 'Good Work, Great Technology', published in 2022 by Clink Street Publishing, charting the relationship between effective workplace technology and productive and happy employees. She won the Willis Towers Watson HR journalist of the year award in 2015 and has been highly commended twice.

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