Pay for chief executives at Britain’s biggest listed companies rose more than six times faster than wages in the wider workforce last year as the average boss’s pay packet hit £3.9m.
Chief executive pay at businesses on the FTSE 100 index surged 11% on a median basis in 2017 while average worker earnings failed to keep pace with inflation, rising just 1.7%, according to the High Pay Centre’s annual review of top pay.
A worker on a median salary of £23,474 would have to work 167 years to earn the median annual pay of a FTSE 100 boss – up from 153 years in 2016, the report showed. The gap between bosses and workers widened despite government efforts to hold companies accountable for runaway pay.
Use of the median figure, which smooths out the impact of outsize payments by taking the mid-point when all CEO payments are lined up from the biggest to smallest, mitigated the effect of the two largest and most controversial pay awards: the £47.1m awarded to Jeff Fairburn of the housebuilder Persimmon, last year’s biggest earner; and £42.8m for Simon Peckham, the boss of industrial turnaround specialist Melrose.
City investors said the report showed that companies were not listening. Andrew Ninian, director of stewardship and corporate governance at the Investment Association, which represents major fund managers, said: “Investors have repeatedly highlighted their concerns with excessive CEO pay, so it is frustrating that the message does not appear to be getting through to some FTSE 100 boardrooms. This year we have seen more FTSE 100 companies get significant votes against their remuneration reports than in previous years.”
Almost half the votes cast at Persimmon’s annual meeting in April opposed Fairburn’s pay package. Uproar over his pay forced Fairburn to say he would take about half this year’s payout, which could be worth about £60m. At Melrose, which bought the engineering company GKN in May, more than a quarter of shareholder votes failed to back Peckham’s pay deal. Pay at Persimmon and Melrose sent the mean figure for chief executive pay – which divides total pay for FTSE 100 bosses by the number of CEOs – up 23% to £5.7m in 2017, which is nine times the rate of mean wage growth.
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