Companies should publish the pay gap between their bosses and their workforce in an effort to shame big business into curbing excessive pay, according to a leading thinktank.
Data published by the High Pay Centre and advisory body Manifest earlier this year showed that the ratio of chief executive pay in the FTSE 100 to their average employee was 150:1 in 2014: average pay for a FTSE 100 chief executive was £5.2m compared with £34,846 for the workforce.
Top executives also benefit from a number of perks that are denied to those outside the higher echelons, from tickets to sports events to expenses for attending award ceremonies and the costs of chauffeurs, car parking and children’s school fees.
“Pay ratios – revealing the gap between what is paid at the top and the middle of a business – could help bring back at least a modicum of shame or embarrassment into our boardrooms,” said Stefan Stern, director of the High Pay Centre.
“If we really want to be ‘all in this together’, to use a phrase that has sadly fallen into abeyance, a narrower gap between pay at the top and what the rest of the organisation receives would be a positive sign,” said Stern.
In a report published on Wednesday, the High Pay Centre said: “Waiving of bonuses has become a modern form of noblesse oblige.” In 12 years between 1995 and 2007, some 16 company chief executives waived their bonuses, while in the six years to 2014, 15 chief executives did not take their bonus.
Stern said he looked forward to a positive response on pay ratios from Sajid Javid, the business secretary, whose predecessor, Vince Cable, announced new binding votes on executive pay in 2012.
The pay gap is a topic that has been raised by Boris Johnson, who told the Conservative party conference in October that social ties would fray if the economic gap between citizens grew too big. In what was interpreted as a swipe against Martin Sorrell, the chief executive of the advertising group WPP, the London mayor said: “And there are some gigantic self-appointed sequoias that pay themselves 780 times the salary of the little shrublets they employ.”
In the US, companies will be forced to publish their pay ratios from 2017.
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