For the first time since 2011, CEOs have needed to work into a fourth day in order to make the same pay a full-time worker would make in a year.
This was one of the High Pay Centre’s key findings as it reported that CEOs’ earnings for 2022 had surpassed the median UK full time salary just prior to 9am on Friday 7 January. The think tank was founded in 2011.
CEO pay showed a 17% fall to £2.7m in 2020 from £3.25m the previous year, a reflection of the temporary pay cuts and bonus cancellations many organisations announced during the initial lockdowns following the outbreak of the Covid-19 pandemic.
The figure of £2.7m is still about 86 times the median earnings of a full-time UK worker but in terms of ratio was the lowest figure for years.
The think tank noted that most FTSE 100 firms have not yet announced CEO pay for their financial year ending in 2021, but 57% of those that have recorded an increase on 2020 levels – so next year’s high pay day could well come earlier. This is particularly likely given that the FTSE 100 rose 14% in 2021, so has inflated the value of share-based incentives that are often the largest components of pay packets for leading executives.
Commentators have also suggested that many of those companies that accepted furlough support have exercised boardroom restraint for the past 18 months but will now feel free to apply a catch-up approach to executive pay.
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Polling carried out by the High Pay Centre with Survation sought to shed light on the public’s views regarding high earners and how their earning levels.
This found that 77% of people recognised that high earners have had advantages in life such as more expensive education, family money and connections. More than half (59%) did not agree that high earners carried out more valuable work than low and middle earners and a similar proportion (63%) felt high earners did not necessarily work harder than lower earners.
Almost three quarters agreed that high earners benefited from government policy more than low/middle earners.
The High Pay Centre stated: “The boards that set executive pay justify very high pay-outs on the basis that those at the top work harder or do more important jobs than the rest of us, but these findings show that this assumption isn’t shared by the general public. Policies such as putting workers directors onto pay-setting committees could introduce some valuable ‘real world’ perspective into decisions on pay.”
The calculations are based on a previous High Pay Centre analysis of CEO pay disclosures in companies annual reports, combined with government statistics showing pay levels across the UK economy.
Thought to be the highest paid CEO is Pascal Soriot, the chief executive of AstraZeneca, who received £15.5m. Among other top earners are Experian’s Brian Cassin (£10.3m), building materials giant CRH’s Albert Manifold (£10m), and property group Berkeley’s Rob Perrins, who collected £8m.
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TUC general secretary Frances O’Grady called for workers representatives to be included in executive pay committees and for more profit-share arrangements to be created in UK businesses. She said: “The pandemic has shown us all who keeps the country going during a crisis. There are millions of hardworking people in Britain – from carers, to delivery drivers, to shop floor staff – who give more than they get back, but greedy executives are taking home millions while ordinary workers face yet another year of pay squeezes.”
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