CEO pay overtakes workers' annual earnings by Tuesday

Fat Cat

Within 22 hours of the first working week of the year!

It was Happy Fat Cat Tuesday! Tuesday was the day when the pay of a FTSE 100 company's CEO overtook the average U.K. worker's earnings for the whole year.

Independent think-tank the High Pay Centre, which was set up to examine corporate governance and pay, claims the average CEO of a U.K. blue chip company earns £4.96 million ($7.27 million) a year, based on average reported pay in 2014, or £1,260 an hour.

Based on this, the average CEO will have earned the median wage for a full-time U.K. worker of £27,645 within 22 hours of the first working week of the year - or Tuesday afternoon.

This is the same amount of time as last year, but is faster than 2014, when CEOs had to wait until the first working Wednesday to surpass average earnings.

According to the High Pay Centre, the aim of Fat Cat Tuesday is to highlight the disparity between pay for those at the top of listed companies and ordinary workers and raise doubts about government efforts to address wage disparity.

"Top pay is unconstrained by the normal market forces which apply elsewhere and this lack of restraint is fuelling public distrust of business," Paul Marsland, deputy director of the High Pay Centre, told CNBC via email.

"The (U.K.) government's intervention on the minimum wage recognises that growth in a business should benefit everyone in the organisation and the extreme multiples of top to average pay run contrary to this principle."

However, the initiative has been criticised by free-market think-tank the Adam Smith Institute.

"Despite consistent attacks on chief executive pay, the High Pay Centre has never told us how much they think CEOs are actually worth. Their complaints are the hand-waving of pub economics, not serious analysis," Sam Bowman, executive director of the institute, said in a press release.

"Chief executives can be worth quite a lot to firms, as is shown by huge moves in company share prices when good CEOs are hired, or bad CEOs are fired. Steve Jobs can make a firm; Steve Ballmer can break a firm," Bowman added. "The High Pay Commission's complaints only make sense if you assume firms don't actually care about making money – which is to say, they don't make sense at all."

Marsland did suggest some ideas for what companies could do to respond to the issue of pay distribution disparity.

"Business can act now to address the problem by considering employees with real world pay experience for remuneration committee membership and by voluntarily publishing the ratio of top to average pay in their business," he said.

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