FTSE 100 chief executive pay increased by 11 per cent between 2016 and 2017, leading calls from the Association of Accounting Technicians (AAT) to introduce pay ratios.
Research published by the CIPD and High Pay Centre reinforced the AAT’s view that current reforms to curb executive pay, such as the public pay register, are inadequate.
Phil Hall, AAT Head of Public Affairs & Public Policy, said: “With some chief executives earning almost £50 million a year and a median of almost £4 million, combined with the fact that over a quarter of all FTSE listed companies are now ‘named and shamed’ on the new public register, it’s obvious to any objective observer that the time for meaningful change is long overdue.”
The CIPD’s survey found that the mean pay ratio between FTSE 100 CEOs and the mean pay package of their employees is 145:1, which is higher than last year.
In 2017, AAT members expressed a desire to introduce a mandatory pay ratio, such as that seen at John Lewis Group who have a 75:1 pay ratio.
The AAT corporate governance survey found that 41 per cent of AAT members wanted an across the board pay ratio of 20:1. This compares with the finding that no one felt the average FTSE 100 pay ratio was appropriate and seven per cent who said there should be no pay ratio at all.
Earlier this year, AAT also criticised the new public register of companies that receive significant investor votes against their pay schemes.
In its submission to the BEIS Select Committee on the issue of Executive Pay it stated: “Almost a quarter of FTSE All-Share companies appeared on the new register and save for a day or two of negative publicity, which was quickly forgotten – and could arguably be said to have damaged public confidence in business rather than helped restore it – has had no discernible impact on company behaviour and is very unlikely to in the future.”
Peter Cheese, chief executive of the CIPD, said: “Despite increased investor activism and the planned introduction of pay ratio reporting, the evidence suggests that very little is changing when it comes to top pay in the UK. It’s disappointing to see that CEO pay has held up in the face of increasing pressure when average pay across the workforce has barely shifted in recent years. However, pressure is building in the system.”
