The Strategist

New study: Average UK employee has to work for 160 years to earn their CEO's salary for one year

08/16/2018 - 04:27

The average income of heads of the largest British companies was 145 times as many as the average salary of employees in 2017. In 2016, the figure was 128, in 2015 – 146, shows a study by the Chartered Institute of Personnel and Development (CIPD) and the analytical organization High Pay Center.

An average employee will need 160 years to earn the amount that the company's CEO receives for a year.

Head of Persimmon construction company Jeff Fairburn became the highest paid CEO last year.

A total of seven women are heading the largest UK companies. In 2016, there were six of them, in 2015 - five. At this pace, gender equality will become a reality only in 43 years, the paper says.

Although women account for 7% of the total number of CEOs, the share of their salaries in the aggregate is only 3.5%. The highest income was received by Head of the pharmaceutical company GlaxoSmithKline Emma Walmsley (4.88 million pounds).

"Despite activities of investors and planned introduction of mandatory reports on the ratio of salaries in companies, the results indicate very little changes when it comes to the salaries of top UK managers," said CIPD CEO Peter Cheese. "It's sad to see that the CEOs’ remunerations are increasing when the average salary of employees has not changed in recent years."

The median size of the remuneration of CEO of the largest British companies in 2017 increased by 11%, despite the harsh criticism from investors and politicians who were dissatisfied with too generous encouragement of corporate leaders.

The total income of managers (including salaries, bonuses, incentive payments and contributions to the pension fund) of companies whose shares are included in the calculation of the FTSE 100 stock index reached 3.93 million pounds ($ 5 million) against 3.53 million pounds in 2016.

The results were impacted by a significant increase in payments of CEOs of two companies, Persimmon (22 times more - to 47.1 million pounds) and Melrose Industries (43 times more - up to 42.8 million pounds). For this reason, the authors of this report pay more attention to the median, rather than the average.

The median income of employees of British companies increased by 2% last year.

Meanwhile, the average CEO compensation rate jumped 23% to 5.66 million pounds ($ 7.23 million), up from 4.58 million pounds a year earlier. Excluding Persimmon and Melrose Industries, the figure rose 6% to 4.85 million pounds.


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