Top bosses will already have made more money by the first Tuesday of 2016 than the typical UK worker will earn all year.
It’s Fat Cat Tuesday (5.1.2016). Top bosses’ pay will surpass the average full-time UK worker’s annual salary after just two days.
By the end of the first Tuesday in 2016, Britain’s top bosses will have made more money in 2016 than the average UK worker earns in an entire year, according to our calculations.
The calculations show that earnings for company executives returning to work in the new year will pass the UK average salary of £27,645 by late afternoon on “Fat Cat Tuesday”.
FTSE 100 chief executives are paid an average £4.96 million a year (note 1 below). We found that even if CEOs are assumed to work long hours with very few holidays, this is equivalent to hourly pay of more than £1,200 (note 3 below).
The typical value of a FTSE 100 CEO’s incentive award has risen by nearly 50% of salary since the previous year (according to the latest Manifest MMK pay survey), while the annual pay of the average UK worker has increased by just £445, from £27,200 to £27,645 (note 2 below).
The figures will raise doubts about the effectiveness of government efforts to curb top pay by giving shareholders the power to veto excessive pay packages.
We have argued that further measures are necessary, such as representation for ordinary workers on the company remuneration committees that set executive pay, and publication of the pay gap between the highest and median earner within a company.
HPC director Stefan Stern said: “‘Fat Cat Tuesday’ again highlights the continuing problem of the unfair pay gap in the UK.
“We are not all in this together, it seems. Over-payment at the top is fuelling distrust of business, at a time when business needs to demonstrate that it is part of the solution to harsh times and squeezed incomes, and is promoting a recovery in which all employees can benefit.”
1. The average pay reported for a FTSE 100 CEO in 2014 was £4.96 million, using the government’s “single figure” measure. (There are different ways of measuring executive pay, and the single figure measure differs from the “pay realised” figure and the pay awarded figures available from Manifest.)
2. Median earnings for full-time workers in the UK (who had been in their job for at least 12 months) were £27,645 in 2015. This represents an increase from £27,200 in 2014.
3. Even when making the very generous assumptions that FTSE 100 CEOs work 12 hours a day, including three out of every four weekends, and take fewer than 10 days holiday per year, this still works out at about £1,260 per hour, meaning that it would take around 22 hours work to surpass the UK average of £27,645 – some time on late Tuesday afternoon, assuming they begin work for the year on Monday January 4.
4. The High Pay Centre is an independent think-tank set up to examine corporate governance and pay at the top of the income distribution. We carry out research aimed at developing a better understanding of top rewards, company accountability and business performance.