The bosses of the top 100 companies on the London Stock Exchange took home pay packets of £5.5 million on average last year, up 10% on the year before, new data has found.
The revelation comes as 16 of the UK’s biggest trade bodies ask the new business secretary to water down upcoming increases to the so-called national living wage –i.e. the minimum wage for people aged 25 and over – which is scheduled to reach £9 an hour by 2020.
As the FTSE 100 chiefs' pay soared, wages of average workers rose just 2% over the same period. A FTSE 100 boss typically now earns 129 times more than their employees.
Stefan Stern, director of the High Pay Centre, which published the findings, said the trade bodies' demands for a relaxation of minimum wage increases should be ignored.
He told BuzzFeed News: “It’s a good test for the new government. We’d expect trade bodies to do this – they pushed back when the minimum wage was first introduced.
"I think it would be odd, given what the new prime minister has been saying – calling for an end to excessive pay and better scrutiny of boardrooms.
“Having said that, she has already taken aim at some of the previous chancellor’s goals, so it will be interesting.”
New prime minister Theresa May said on the steps of Downing Street following her appointment: “The government I lead will be driven not by the interests of the privileged few."
The boss of advertising giant WPP, Sir Martin Sorrell, topped the pay chart, taking home a record £70 million in 2015 – up from the previous controversial amount of £43 million in 2014.
Tony Pidgley, who runs housebuilder the Berkeley Group, was second, pocketing £23 million. His pay soared thanks to shares he was given in 2009 that he has since cashed in.
No women made it into the top 10 list, for the second year in a row. Only six women are chief executives of FTSE 100 companies.
Meanwhile, trade associations including the Federation of Small Businesses, the National Farmers’ Union, and the Association of Convenience Stores wrote to Greg Clark, the new business secretary, urging him to “exercise caution” over upcoming minimum wage rises.
The introduction of the national living wage, a flagship policy of former chancellor George Osborne, saw the minimum wage for workers 25 and over rise from £6.70 an hour to £7.20 and is scheduled to rise further to £9 an hour in 2020.
The idea behind the wage is that it should be 60% of average earnings by 2020.
The letter said:
We recommend that you and the Low Pay Commission [which assesses how much the minimum wage should be] exercise caution when setting future rates to reflect the economic uncertainties the country faces over the coming years…
We are concerned that focussing on a fixed figure based on projections four years into the future risks a front loading of National Living Wage increases, which would adversely impact investment decisions made this year and next.
The Confederation of British Industry, which did not sign the letter, has also said the government should be prepared to abandon the national living wage target if the economy worsens, according to the Financial Times.
A government spokeswoman for the business, energy, and industrial strategy department did not rule out potential falls in the national living wage. She said:
The Government is committed to building an economy that works for all
and ensuring that the National Living Wage works for employees as well as
businesses of all sizes. ... The Government has asked the Low Pay Commission to recommend increases to the National Living Wage towards 60% of median earnings by 2020, subject to sustained economic growth.
Stern of the High Pay Centre said it was important to reduce pay to chief executives, arguing: “It’s the symbolism. The demotivational impact on the gap between mega pay is not good and must be addressed.”
He suggested companies be forced to publish the ratio between average salaries and chief executives, that shareholders hold binding votes on executive pay, and that ordinary workers be introduced to boards to give a voice to typical employees.
Britain’s highest-paid CEOs in 2015
- Sir Martin Sorrell, WPP, £70.416 million
- Tony Pidgley, Berkeley Group, £23.296 million
- Rakesh Kapoor, Reckitt Benckiser, £23.190 million
- Jeremy Darroch, Sky, £16.889 million
- Flemming Ørnskov, Shire, £14.638 million
- Bob Dudley, BP, £13.296 million
- Erik Engstrom, Relx, £10.869 million
- Mike Wells, Prudential Financial, £10.031 million
- Michael Dobson/Peter Harrison, Schroders, £8.905 million
- António Horta Osório, Lloyds Group, £8.773 million