Workers need 160 years to earn CEO ’s annual salary

The pay gap has closed slightly
The pay gap has closed slightly

Workers would take 160 years to earn the annual salary of an average company chief executive despite a slowdown in top pay, a new report has revealed.

A “huge gap” remains between the pay of chief executives and other employees despite a fall in average executive pay in the past year, the study found.

An analysis of chief executives in FTSE 100 companies showed an average pay package of £4.5 million, down from £5.4m in 2015.

The study, by the High Pay Centre think tank and the Chartered Institute of Personnel and Development (CIPD), also found there are just six women in the list, paid an average of £2.6m, well below their male counterparts.

Stefan Stern, director of the High Pay Centre, said the fall in average executive pay followed political pressure and hostile public opinion.

“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, and we should beware the ratcheting up of pay lower down the FTSE league table as chief executives and remuneration committees ‘chase the median’. This helps nobody but a few lucky top execs.”

The pay ratio between FTSE 100 chief executives (CEOs) and the average wage of their employees was 129:1 last year, down from 148:1 in 2015, said the report.

The study also found that just over a quarter of firms in the FTSE 100 are accredited to the Living Wage Foundation, which recommends a higher living wage than the official figure.

Peter Cheese, chief executive of the CIPD, said: “We have to hope that the reversal in rising executive pay is the beginning of a re-think on how CEOs are rewarded, rather than a short-term reaction to political pressure.”