Corporate pay gap widens in UK

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London - The pay of the bosses of Britain's top companies continued to stretch away from that of the rest of society in 2014, with the average FTSE 100 chief executive earning 183 times as much as typical UK workers. The High Pay Centre pressure group has crunched the numbers from the company reports of the UK's largest firms and found that average total pay for a chief executive climbed to £4.964m. That's up slightly from the average £4.923m remuneration package in 2013 and sharply higher than the £4.129m average package seen in 2010. The average worker earned £27 200 in 2014, according to the Office for National Statistics, meaning FTSE bosses were paid 183 times more. That ratio is up from 182 times in 2013 and 160 times in 2010, the High Pay Centre says. The FTSE 100 average conceals considerable disparities in the remuneration of top executives. By far the highest paid was Sir Martin Sorrell of WPP, who was awarded a package worth £43m in 2014. Ben van Beurden of Royal Dutch Shell got £19.5m and Erik Engstrom of Reed Elsevier (now known as RELX) received £16.2m. Peter Long of Tui Travel got a £13.3m package. Dave Forsey, chief executive of Sports Direct, received just £150 000 in 2014, although he is in line for a bumper remuneration package worth £6.7m in 2015 thanks to the vesting of a share scheme. The FTSE 100 contracted by 3 percent in 2014, even while average executive compensation grew.

Deborah Hargreaves, the High Pay Centre's director, said the increasing remuneration for top bosses, often regardless of the underlying performance of their firms, suggests a failure of corporate governance. “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,” she said.

When Vince Cable was Business Secretary he introduced legislation compelling companies to hold a binding vote on future pay policy every three years at least.

This year saw a smattering of high-profile double-digit shareholder votes against remuneration packages, including at WPP, Burberry and Morrisons. But the High Pay Centre calculated that the average vote against pay awards across the FTSE 100 was just 6.4 percent.

The pay of the bosses of Britain's biggest companies has also soared relative to their own workforces. Calculations by the High Pay Centre last year showed that the average FTSE 100 chief executive was paid 130 times that of their average employee, up from just 47 times in 1988.

But the think-tank admits this is an “imprecise” figure because of inconsistent levels of disclosure by firms.

It is calling for the UK authorities to follow the lead of America's Securities and Exchange Commission, which ruled last week that every company must publish the pay ratio between their chief executive and their median employee.

THE INDEPENDENT