FTSE 100 chief executives will earn as much than the annual income of a UK worker on median pay an hour quicker than they did last year, according to an estimate from a thinktank.
In the latest instalment in a newly intensified debate over executive pay, the High Pay Centre released an estimate that the median FTSE 100 chief executive would earn as much as the median worker over the course of a year by 1pm on Thursday this week—just halfway through the third working day of the year.
The estimate is based on an analysis of publicly disclosed figures on chief executive pay, and comes against a backdrop of a continuing cost-of-living crisis and amid efforts by the chief executive of the London Stock Exchange (LSE) to talk up the necessity of high executive remuneration to ensure UK businesses are competitive internationally.
Luke Hildyard, director of the High Pay Centre, targeted the LSE and others for talking up the need for bigger pay deals.
“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. 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.”
LSE chief executive Julia Hoggett began pushing for a reconsideration of executive pay in blog published in May last year, in which she wrote: “We should be encouraging and supporting UK companies to compete for talent on a global basis, so we remain an attractive place for companies to base themselves, stay and grow.”
This week, Hoggett appeared on BBC Radio 4’s Today programme, where she repeated her argument that if the UK wants “globally consequential” companies, firms would have to pay “in a manner” that is competitive in the international market.
“We have to recognise talent is mobile; that companies, particularly those with a global footprint, are competing for talent on a global basis; and we want to make sure that we are enabling ourselves to have globally consequential companies in the UK, and make sure that we can use that to benefit everybody.”
Hoggett has the backing of the Capital Markets Industry Taskforce (CMIT), a body she chairs, which was created to lobby for change to support the City’s competitiveness. CMIT members include senior corporate leaders, lawyers, accountants and investors.
Not everyone is convinced by the CMIT’s claims. Sandy Pepper, a professor at the London School of Economics and an expert on executive pay, says the High Pay Centre’s figures have lost the power to shock, but the argument for higher pay also seems weak.
He says that the “hypothesis advanced by some commentators that CEOs should be paid more in order to solve the UK economy’s growth problem is magical thinking, an example of getting ‘cause and effect’ the wrong way round.
“Perhaps the time has come to shift the focus of the inequality debate to reducing poverty, restoring the real value of the pay of essential public sector workers and eliminating major defects in the welfare system, the true indicators of the country’s prosperity.”
The long-running argument over executive pay has entered a new phase. Julia Hoggett is working to support a stock exchange that has seen the number of listed companies decline in recent years and she believes that both pay and governance are among the obstacles to growth. She has won the ear of ministers on governance, but winning over the public, and more importantly investors, on pay levels may be harder.