During 2014 CEO pay reached 183 times the earnings of the average UK employee, according to a new study.
The High Pay Centre, an independent think tank, carried out research into the salaries of FTSE 100 companies and found that the average CEO pay had increased to £4.964 million; a slight rise on the £4.923 million handed out in 2013. The ten highest earning CEOs received over £156 million between them.
Just a quarter of the FTSE 100 companies are Living Wage accredited employers.
The High Pay Centre was able to use company annual reports to conduct its research. FTSE 100 companies are required to share this information due to legislation set out in 2013.
Deborah Hargreaves, director at the High Pay Centre said: “Pay packages of this size go far beyond what is sensible or necessary to reward and inspire top executives. It’s more likely that corporate governance structures in the UK are riddled with glaring weaknesses and conflicts of interest.”
“The Coalition Government introduced some welcome reforms in 2013 that have at least enabled us to get a better understanding of the executive pay racket. However it’s clear that these reforms didn’t do nearly enough to start building a pay culture where everybody is rewarded fairly and proportionally for the work that they do.”
TUC general secretary Frances O’Grady said that inequality is reaching “stratospheric levels”. “After years of falling living standards it is a disgrace that top executives are taking an even bigger share of the rewards of growth,” she said. “We need a recovery that works for the many and not just the few.”
These findings come just weeks after the Securities and Exchange Commission in the US voted to force companies to disclose the pay gap between CEOs and their employees. The law, which has been fiercely opposed by corporations based in the US, will come into force in 2017.
The High Pay Centre has called on the government to introduce similar measures in the UK. It also advocates that there should be representatives from the workforce on the remuneration committees that set executive pay in order to keep their salaries in check.