Most of us would find the prospect of a 17% pay cut pretty terrifying. For the average worker, on approximately £28,000, it would mean losing around £5,000 of their salary and consequently a severe tightening of belts.
But MT suspects that most FTSE bosses won’t be pulling their kids out of private school and switching their weekly shop to Lidl just yet. Their pay has dropped by the same proportion but they’re still taking home a mean average of £4.5m, which should comfortably keep them in prosecco and prawn sandwiches.
Despite the drop, it would still take the average worker a full 160 years to earn as much as the average boss, according to analysis by the High Pay Centre and the CIPD released today. And to reach top earner Sir Martin Sorrell’s £48.1m annual haul you’d need to rack up a whopping 1,718 years at the coalface – which wouldn’t leave you much time to enjoy retirement.
The drop follows years of campaigning against high executive pay – both by those concerned about the societal impact of inequality and by investors with an eye on the bottom line. For years top dog pay has soared well out of proportion of shareholder returns, so it’s about time we saw a correction in the market.
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‘We have finally seen a fall in executive pay this year, in the context of political pressure and in the spotlight of hostile public opinion,’ said High Pay Centre boss Stefan Stern. ‘This is welcome, but the response has been limited and very late. It is also, so far, a one-off. We need to see continued efforts to restrain and reverse excess at the top.’
It’s worth noting that while the highest-paid 25 bosses have had their pay reined in by 24%, those at the bottom end have seen an increase in their wages. ‘We should beware the ratcheting up of pay lower down the FTSE league table as CEOs and remuneration committees ‘chase the median,’ said Stern. ‘This helps nobody but a few lucky top execs.’
The report also highlights a gender disparity among top bosses. In the time period covered there were six women running FTSE 100 firms (easyJet’s Carolyn McCall, Imperial Brands’ Alison Cooper, Royal Mail’s Moya Greene, Severn Trent’s Liv Garfield, Whitbread’s Alison Brittain and Kingfisher’s Veronique Laury) and they earned just 4% of all pay awarded. Emma Walmsley, since appointed CEO of GSK, is on around 25% less than her predecessor Andrew Witty.
The pay disparity is as much the result of low representation as about absolute differences in what men and women bosses get paid (though the women’s pay is eclipsed by that of Martin Sorrell, who received three times as much as the six of them put together). Three quarters of FTSE firms still have no female executive directors at all, so don’t hold your breath for a massive shift in that metric any time soon.
Background image: taxrebate.co.uk