(Bloomberg) -- Pay for bosses at leading U.K.-listed companies declined by 17 percent last year as boards reacted to political pressure to rein in excessive compensation.
Chief executive officers in the U.K.'s benchmark FTSE 100 Index earned an average of 4.5 million pounds ($5.9 million) in 2016, down from 5.4 million pounds the previous year, the Chartered Institute of Personnel and Development and the High Pay Centre said on Thursday. Even with the decline, it would take the average British employee 160 years to make the same amount.
“We have finally seen a fall in executive pay this year, in the context of political pressure and in the spotlight of hostile public opinion,” Stefan Stern, director of the High Pay Center, said in an email. “This is welcome, but the response has been limited and very late. It is also, so far, a one-off. We need to see continued efforts to restrain and reverse excess at the top.”
Prime Minister Theresa May made tackling unfairness in British society a key aim of her government, though a year into her tenure she's yet to unveil concrete measures on corporate pay. In November, ministers proposed changes to the the way executive compensation is set and company boards are structured and a public consultation on the plans ended in February. Business Minister Margot James said measures will be announced soon.
Gender Pay Gap
“Our responsible business reforms, which we will publish shortly, will help to enhance the public's trust and confidence in big business,” James said in the email announcing the report. “Businesses should be run responsibly, including ensuring executive pay is properly aligned to performance.”
Other findings for 2016 in Thursday's report include:
- The average FTSE 100 CEO received 129 times the average earnings of their employees.
- Sixty FTSE 100 CEOs were paid more than 100 times the median 28,000-pound pay of a full-time U.K. worker.
- There were just six women CEOs in the FTSE 100, and they earned on average 2.6 million pounds, compared with 4.7 million pounds for the men.
- Carnival Plc CEO Arnold Donald earned 1,264 times the wages of an average staff member at his company. For WPP CEO Martin Sorrell, the ratio was 1,134.
There's “a clear gender pay disparity at the top,” said CIPD CEO Peter Cheese. “Quite rightly this issue of fairness is increasingly being called out and this needs to be addressed at all levels of businesses.”
The organizations recommended that publicly listed companies should be compelled to publish the ratio between the pay of their CEOs and the median pay of their workers. Employees should also be represented on corporate remuneration committees that decide chief executive pay, the report said.
To contact the reporter on this story: Alex Morales in London at amorales2@bloomberg.net.
To contact the editors responsible for this story: Flavia Krause-Jackson at fjackson@bloomberg.net, Thomas Penny, Eddie Buckle
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