UK CEOs earn a worker’s annual pay in 3 days

LONDON: By the end of the first three working days of the year, the United Kingdom’s top bosses will each have earned on average as much as a typical worker will take home in all of the year, according to a report.

While the difference in compensation appeared stark, it narrowed slightly, compared with the previous year, said the High Pay Centre and the Chartered Institute of Personnel and Development yesterday.

The so-called “Fat Cat” study comes amid growing investor and political unease in the UK about inflated chief executive officer (CEO) pay.

“The system has worked a little bit better this year,” said the High Pay Centre director Stefan Stern.

“We calculate the typical CEO has to work 32 hours as opposed to 28” to earn an average worker’s annual salary, it added.

The past couple of years have been marked by investor revolts against the level of salaries paid to top executives at some UK listed companies, including Sky Plc and Pearson Plc. Other firms adjusted pay packages downwards to avoid protest votes.

“There are still grossly excessive and unjustifiable gaps between the top and the rest of the workforce,” said Stern.

The latest calculations were based on an earlier finding by the groups that earnings for CEOs in the UK’s benchmark FTSE 100 dropped by a fifth in 2016 to £4.5 million (RM24.44 million) annually and another showing a CEOto-worker pay ratio of 120 to 1.

This is far lower than in the US, where CEOs of S&P 500 firms received on average US$13.1 million (RM52.66 million) in compensation, giving a ratio of 347 to 1, according to the AFLCIO union.

C-suite compensation levels have tumbled at some firms, following grumbling from shareholders.

But such concerns were misguided, said Sam Dumitriu, head of research at the free market think tank the Adam Smith Institute.

“It’s a mistake to fret about executive pay. said In fact, given how important the decisions a CEO makes are to the success of a firm, it would be shocking if they were not extremely well paid,” he added.

“To ensure this year’s fall in CEO remuneration isn’t just a blip on the consistently upward trend of recent years, it’s crucial that the government keeps high pay and corporate governance reform high on its agenda,” said CIPD chief executive Peter Cheese. Bloomberg