John McDonnell warns 'fat cats getting fatter' as chief exec pay soars

Posted On: 
15th August 2018

Labour has slammed "fat cat" executive pay, as a new report revealed that it would take the average worker more than a century to earn what Britain's top business chiefs pocket in a year.

The Shadow Chancellor said the soaring CEO pay packets came when most people's wages were 'barely keeping up with inflation'
Credit: 
PA

Fresh analysis by the Chartered Institute of Personnel Development finds that the median pay for a FTSE 100 chief executive has increased by 11% year-on-year, with average pay for a CEO in the list of top companies now standing at £3.9m.

That was up from £3.5m in 2016, and the CIPD says it would now take a worker on the average UK full-time salary of £23,474 some 137 years to earn what the average FTSE CEO takes home in a single year.

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Shadow Chancellor John McDonnell fumed: "Most people's wages are still below 2010 levels and are barely keeping up with inflation.

"So when they see the fattest cats get fatter yet again with an 11% pay rise, it's no wonder people question the fairness of our society."

The CIPD attributed some of the hike in CEO pay to the "strong performance of the stock market in the years to 2017".

But the personnel body also urged ministers to adopt "more meaningful change to policy and practice" in a bid to reassure shareholders that returns are not being squandered on executive salaries.

The CIPD also pointed out that FTSE 100 CEOs are "as likely to be named Dave or David" as they are to be a woman, with just seven female chief executives in the list of top CEOs in 2017. That marked a rise of one on 2016 levels, however.

"Out of the 25 highest paid CEOs in the FTSE 100, only one was female – Emma Walmsley of Glaxosmithkline plc, who was paid less than the 24 men on that list," the group said.

The report comes after ministers vowed to force listed UK companies with more than 250 workers to publish and explain the differences between pay their lowest and highest paid staff.

For the first time, firms were also this year required to reveal the gap between what men and women in their organisation earn.

A spokesman for the Department for Business said: “While most companies get their responsible business practices right, we understand the anger of workers and shareholders when bosses’ pay is out of step with company performance.

“That is why as part of our corporate governance reforms, the UK’s largest companies now have to ensure employees’ interests are represented in the boardroom and annually publish and explain the pay ratio between senior management and the workers.  

“These upgrades are making boards more accountable while enhancing our reputation as one of the best places in the world to work, invest and do business.”