A new report has highlighted the discrepancy of pay gap between chief executives of British largest businesses and average workers, saying the bosses earn more in three working days than an average full-time worker in a year.
In 2019, the average FTSE 100 CEO, on a median pay packet of 3.9 million pounds, only needs to work until 1 p.m. on January 4 to earn an average full-time worker's annual salary at 29,574 pounds, according to calculations from independent think tank the High Pay Centre (HPC) and the Chartered Institute of Personnel and Development (CIPD).
"We are comparing the wages of FTSE 100 with that of the median wage over the wider economy -- CEOs are paid a lot more relative to their workers and workers across the wider UK economy than was the case 40 or even 20 years ago," Luke Hildyard, director of the High Pay Center told Xinhua in an exclusive interview.
Executive pay has become a controversial topic in recent years. Pay levels for a FTSE 100 CEO has rocketed from being 59 times their average employee in 1999 to nearly 145 times in 2017, the report found.
The CEOs and their high-ranking management teams with juicy salaries feature the top one percent earners across Britain, taking around six percent of all incomes in the late 1970s and 15 to 16 percent before the financial crisis in 2008, said Hildyard.
This figure declined sharply after the financial crisis, but climbed again to about 20 to 22 percent in 2013, according to the latest calculation made by the World Inequality Database in its 2018 report.
"There is an argument that that money could otherwise be spent on pay rises for lower or middle income workers, or on investment in the company to improve productivity and innovation," Hildyard added.
The myth of "super talent" continues to drive excessive pay of executives, as remuneration committees, who set pay at major British companies, continue to fear that executives will walk out on the company if their pay demands are refused, and worry about stock market reactions to an abrupt departure, the HPC and the CIPD found.
The two organizations demand bold reforms to the remuneration committees, making them more diverse in terms of ethnicity and gender as well as professional backgrounds and expertise to combat group think.
They are calling for CEO pay linked to employee well-being and investment in workforce training and development that are crucial for good corporate governance.
They proposed a less complex system for CEO pay based on basic salary, with an incentive to deliver sustainable long-term performance provided by a much smaller restricted share award. (One pound = 1.27 U.S. dollars)