Executive Excess - The gap between executive and employee pay within companies
- Executive pay levels in the UK remain excessive.
- The gap between executive pay and employee pay within the same companies is far too high and is damaging firm performance, employee morale and social cohesion.
- Current reporting requirements are inadequate and do not allow fully accurate and comparable figures on employee pay and therefore pay gaps within companies to be produced.
- This weakness in disclosure must be addressed as a matter of urgency. The government should consult on, and introduce, a legal requirement for company reporting on employee pay in a standardised format.
- Worker representation on remuneration should be implemented. This should be mandatory and remuneration committees should include a minimum of two worker representatives.
Executive Excess provides a snapshot of top company directors’ pay and how it compares with that of their own employees in the FTSE 350. It finds that median total earnings for FTSE 100 top directors 100 were £3,195,353, while within the FTSE 250 median earnings for top directors were £1,284,361. It finds that the ratio between top directors’ pay and average employees at their own companies varies hugely, from 1,601:1 at the top to 3:1 at the bottom.
The report provides a variety of data tables, presenting information on top directors’ total earnings and basic salary alongside average employee pay at the FTSE 350, breaking the findings down by sector. The report also includes information on the ratio between top directors’ pay and average employee pay in their own companies and the ratio between top directors’ pay and the pay of a full-time worker on the non-London living wage.
But the report also finds that publicly available information on employees’ pay is woefully inadequate and that it is currently not possible to calculate robust figures for average employee pay from company annual reports. The report therefore calls for standardised mandatory disclosure on employee earnings to be included in annual reports. It also calls for worker representation on remuneration committees to tackle excessive executive pay and help companies take into account employee pay and conditions within their company when setting directors’ pay, as they are required to do by the Corporate Governance Code.
Download Executive Excess - The gap between executive and employee pay within companies [PDF]
Stay Updated
Want to hear about our latest news and blogs?
Sign up now to get it straight to your inbox