UK bosses earn 130 times more than average workers as pay gap grows

The leaders of the UK's largest companies received the highest pay packets last year, leading to the biggest difference between their earnings and those of ordinary workers in eight years.

According to new figures from the High Pay Centre, the typical pay for a chief executive of a FTSE 100 company reached £5.06m. This is an increase of 8.6% from £4.66m the year before and is the highest amount ever recorded.

After chief executives took pay cuts during the pandemic when businesses struggled, their pay has been increasing steadily. This has now led to the earnings gap widening significantly.

The analysis shows that bosses of these major companies now earn 130 times the salary of an average full-time UK worker. This is an increase from 124 times in the previous year and is the largest gap since 2018, when the ratio was 137.

The High Pay Centre, a group that has been campaigning for fairer pay for workers since 2011, is closing down. During the last financial year, FTSE 100 companies spent a total of £856.6m on executive pay, with £550m going to chief executives.

Andrew Speke, interim director of the High Pay Centre, stated that the large increase in the gap between executive and worker pay should alert those who have ignored rising executive salaries. He hopes that a new government focus on economic fairness will bring the issues of economic inequality and excessive corporate spending back into public discussion.

Andy Burnham, who is set to become prime minister, has previously called for a public discussion about high pay. He has promised to help families dealing with the high cost of living.

The median salary for a full-time UK worker is £39,000, based on estimates from October. The total amount paid to FTSE 100 executives decreased slightly to £857m from £1bn reported earlier, and the average pay fell from £6.09m to £5.89m.

This decrease in total executive pay is partly due to a very large payment of £212m made the previous year by Melrose Industries. This was an exceptional bonus related to their purchase of the engineering company GKN in 2018.

Out of the 94 large companies included in the analysis, 66 increased the pay for their chief executives compared to the year before. Long-term incentive payments, which are bonuses given over several years, rose by 20% to an average of £2.7m, and short-term bonuses increased by 14% to £1.8m.

Pascal Soriot, the chief executive of the pharmaceutical company AstraZeneca, was the highest-paid boss in the FTSE 100 last year, earning £17.7m. This is the third time in four years he has been the top earner.

Emma Walmsley, who recently stepped down as boss of GSK, is the only woman in the top 10. She earned £15.6m in her final year, a nearly 50% increase.

CS Venkatakrishnan, chief executive of Barclays, received £15m. This was the highest pay for a Barclays boss since 2011, following the removal of EU rules that limited bonus payments for UK banks.

Other top earners included Wael Sawan, the head of Shell, who saw his pay increase by 60% to £13.7m, and Bill Winters, chief executive of Standard Chartered, who earned £12.7m.

The High Pay Centre believes that companies are spending too much on executive pay, which affects the ability to give bigger raises to other employees. The group is suggesting changes such as a special tax on high earners, having worker representatives on company boards, and ensuring employees know their rights.

Speke added that rising executive pay in FTSE 100 companies for four consecutive years is now significantly outpacing worker pay growth. He warned that failing to address this inequality could reduce trust in the economic system and lead to a rise in right-wing political movements.