Fat Cat Thursday: UK CEO pay already exceeds average worker salary for the year

Skyscrapers in the Canary Wharf financial, business and shopping district in London, UK.

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The average FTSE 100 CEO will have earned more this year than the median full-time worker’s annual salary by 1 p.m. London time on Thursday, according to estimates from the High Pay Centre think tank.

The U.K.’s top bosses will surpass the milestone an hour earlier than they did in 2023, the calculations suggest, while leading bankers will exceed it on Jan. 17.

The calculations are based on the High Pay Centre’s analysis of the most recent available CEO pay figures from British blue-chip companies’ annual reports, compared with government data on pay levels across the U.K. economy.

Median FTSE 100 CEO pay (excluding pension) currently stands at £3.81 million ($4.84 million), 109 times the median full-time worker’s pay of £34,963, the think tank said. This represents a 9.5% increase on median CEO pay levels as of March 2023, while the median worker’s pay has risen by 6%.

“Lobbyists for big business and the financial services industry spent much of 2023 arguing that top earners in Britain aren’t paid enough and that we are too concerned with gaps between the super-rich and everybody else,” said High Pay Centre Director Luke Hildyard.

“They think that economic success is created by a tiny number of people at the top and that everybody else has very little to contribute. When politicians listen to these misguided views, it’s unsurprising that we end up with massive inequality, and stagnating living standards for the majority of the population.”

Leading business and finance figures in the U.K. in 2023 called for an increase in remuneration for British CEOs. The High Pay Centre highlighted that in December, Legal and General Investment Management adjusted its executive pay guidelines to permit companies it invests in to offer more generous incentive payments.

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In May, London Stock Exchange CEO Julia Hoggett argued that pay levels for top executives were too low, and pose a risk to the U.K.’s ability to attract and retain elite domestic and international talent, in turn jeopardizing the economy.

“And yet, very often, this talent objective is hampered by the advice and analysis of the proxy agencies and some asset managers voting against executive pay policies even when those pay levels are significantly below global benchmarks,” she said in a post on the exchange’s website.

“Often the same proxy agencies and asset managers that oppose compensation levels in the UK support much higher compensation packages in different jurisdictions, notably in the U.S.”

S&P 500 CEOs stateside earned an average of $16.7 million in 2022 compared with an average full-time worker’s annual salary of $61,900, according to the AFL-CIO.

Hoggett said a “constructive discussion with all stakeholders about a topic that tends to generate emotion and strong views” was essential if the U.K. is to be placed on a competitive footing internationally.

‘Obscene levels of pay inequality’

The Trades Union Congress, which represents 48 member unions across the U.K., said Thursday’s figures showed Britain’s ruling Conservative government was presiding over “obscene levels of pay inequality.”

“While working people have been forced to suffer the longest wage squeeze in modern history, City bosses have been allowed to pocket bumper rises and bankers have been given unlimited bonuses,” TUC General Secretary Paul Nowak said in a statement.

A spokesperson for the U.K. Treasury was not immediately available to comment when contacted by CNBC.

U.K. workers and households have endured a historic cost-of-living crisis over the last two years, while the tax burden continues to grow and is expected to hit a post-war high of 37.7% of gross domestic product in 2028/29, according to the independent Office for Budget Responsibility. This is despite recently announced cuts to the National Insurance tax on workers.

Sharon Graham, general secretary of Unite, one of the U.K.’s largest unions with more than 1.2 million members, said the union would “not tolerate employers who want one rule for the bosses and another for the workers.”

“These CEOs need to get their snouts out of the trough and give their employees a proper piece of the pie. Unite is on a mission to make work pay in this country and where employers have ability to pay, we will continue to demand and win proper pay rises for our members,” she added.