Last year, the CEOs of Britain’s leading firms enjoyed an average pay increase of nearly 16%. This boost in executive compensation comes at a time when the majority of the UK’s workforce faces financial pressure from escalating costs.
Data from the High Pay Centre highlights that the median salary for a FTSE 100 CEO in 2022 stood at £3.91m, an increase from £3.38m in 2021. To put this in perspective, a typical FTSE 100 executive now earns a staggering 118 times more than an average UK worker, who takes home about £33,000 annually.
AstraZeneca’s CEO, Sir Pascal Soriot, emerged as the top earner last year, with a whopping £15.3m pay packet. AstraZeneca gained significant recognition during the pandemic due to its collaboration with Oxford University to create a Covid-19 vaccine. Other top earners include Charles Woodburn of BAE Systems with £10.7m and Emma Walmsley of GlaxoSmithKline, the highest-earning woman, with £8.45m.
Major energy firms BP and Shell also made headlines as their top executives received substantial pay amid rising energy costs, contributing to the increase in the cost of living.
In defence of their compensation packages, several companies stressed that their remuneration structures are competitive and in line with industry standards. They highlighted that executive salaries often consist of various components, including bonuses and incentives, with base salaries comprising just 21% of total pay for FTSE 100 CEOs. This is in stark contrast to most UK workers.
Gillian Wilmot, a veteran of remuneration committees across multiple firms, pointed out that the companies in the limelight represent the apex of the business pyramid. She compared their situation to top-tier athletes, suggesting the figures don’t give a complete picture of the broader business landscape. Wilmot also stressed the lack of diversity in top roles, particularly the underrepresentation of women.
Outside the circle of elite companies, many workers are struggling as their wages don’t keep pace with the escalating prices, especially for essential goods like gas, electricity, and food. Inflation rates have soared, touching 11.1% last October.
Current statistics from the Office for National Statistics (ONS) indicate that regular pay growth, not accounting for bonuses, reached 7.8% in the three months leading up to June, year on year. However, when adjusted for inflation, this translated to an actual decrease of 0.6%.
Despite criticism, some argue that the pay of top executives should be seen in the broader context of the value they bring, both to their companies and the economy as a whole. They believe that viewing these salaries in isolation without considering the broader benefits can be misleading.
The Workers Union Says…
As the pay gap continues to widen between those at the helm of large corporations and the broader workforce we are concerned that Britain is creating a “polarized workforce.” We need an economy that benefits all workers, not just those at the top.