WPP boss Martin Sorrell has once again topped a list of Britain’s highest-paid CEOs after netting a not-too-shabby £70m worth of remuneration last year. Research by the High Pay Centre, which campaigns for more restraint in the awarding of executive pay, put the advertising mogul ahead of Berkeley’s Tony Pidgeley and Rakesh Kapoor, CEO of consumer goods giant Reckitt Benckiser.
The think tank found that the (mean) average FTSE 100 CEO landed a pretty handsome £5.5m last year, around 10% higher than the year before and a massive 33% increase on 2010. ‘There is apparently no end yet in sight to the rise and rise of FTSE 100 CEO pay packages,’ said High Pay Centre director Stefan Stern. ‘In spite of the occasional flurry from more active shareholders, boards continue to award ever larger amounts of pay to their most senior executives.’
It’s worth noting, however, that the average figures are distorted substantially by those at the top. Median FTSE 100 CEO remuneration increased by a much more restrained 2.6% to around £4m, a small fraction of what Sorrell earned. Nonetheless the stats will give renewed determination to those who want to see CEO pay come back down to earth.
That the average FTSE boss earns around 180 times as much as the average full-time worker in the UK remains a source of consternation. And the fact that today’s news coincides with calls from business groups to slow down or even abandon the government’s target of a £9 living wage by 2020 will only add to the feeling that there’s one rule for big hitters and another for everyone else. And that could be hampering productivity – according to the Chartered Institute of Personnel and Development, six in ten employees say high CEO pay demotivates them at work.
So what’s to be done? A ‘maximum wage’, as proposed by some, would likely be a step too far, encouraging the brightest and best to toddle off to the US or Asia and therefore damaging the performance of UK Plc. The new prime minister Theresa May has suggested giving workers a say on remuneration and publishing CEO-average employee pay ratios (something no FTSE 100 companies currently do) to shame boards into action.
Another proposal that has been floated is making shareholder votes on executive pay more regular, and binding. Two companies, BP and Smith & Nephew, faced majority shareholder dissent this year but the votes were just advisory. Perhaps given the power to directly control the pay of their CEOs shareholders would be more interested in rebelling. With Downing Street keen to tighten its grip on the political centre ground and growing anger about inequality, FTSE bosses will likely find themselves carrying lighter wallets in the near future.