Corporate governance structures in the UK are “riddled” with faults and “conflicts of interest”, according to the High Pay Centre.
The think-tank was commenting after its latest research found average chief executive pay rose to £5m in 2014, up from £4.1m in 2010.
The research body says average pay is now 183 times that of the median full-time worker in the UK, up from 160 in 2010.
The figures come in the wake of the US passing new rules forcing companies to disclose comparisons of their CEO salaries to that of their average worker. The Shareholder Rights Directive, currently under negotiation in Brussels, could also introduce new “say on pay” legislation across all member states giving investors greater scrutiny over executive pay.
Deborah Hargreaves, director of 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.”