Chief executives of FTSE 100 firms have average pay packets pf £3.9m, or around £1,000 per hour, according to a report by the High Pay Centre think tank and the Chartered Institute of Personnel and Development (CIPD).
This is compared to the average full-time worker in the UK who earns a gross annual salary of around £29,574.
The £3.9m figure was calculated by the CIPD and the High Pay Centre in its 2018 analysis of top pay and it marks an 11% increase on the £3.5m figure reported in the 2017 analysis.
The pay increase means that FTSE 100 CEOs, working an average 12-hour day, will only need to work for 29 hours in 2019 to earn the average worker’s annual salary, two hours fewer than in 2018.
The report identified the shortcomings of the remuneration committees (RemCos) charged with setting executive pay and calls for them to be significantly reformed.
The ‘super talent’ myth
In particular, it highlighted the myth of super talent as a factor that continues to drive excessive pay and how there needs to be much greater diversity among those responsible for setting CEO pay, both in terms of their ethnicity and gender, but also their professional backgrounds and expertise.
It also marked how current pay mechanisms contribute to the problem of high pay.
In response, the CIPD and High Pay Centre recommended replacing long-term incentive plans (LTIPs) as the default model for executive remuneration with a less complex system based on a basic salary and a much smaller restricted share award.
This would simplify the process of setting executive pay and ensure that pay is more closely aligned to executive performance.
In November 2018, Persimmon group chief executive Jeff Fairburn stepped down, after the board said criticism of his £75m bonus had a negative impact on the reputation of the business.
