High Pay Hour: Top Pay Differentials from High Pay Centre

Author

Damian Carnell
January 10, 2023

What’s the Story?

Last Thursday 5th January, the High Pay Centre study of top pay said that FTSE 100 CEO pay exceeded that of the average UK worker at 2pm that day. Other high pay figures were presented, also showing January crossover dates in the main.

High Pay Hour 2023 • High Pay Centre

HPC research shows how quickly FTSE 100 CEOs overtake the annual salary of a UK worker.

https://highpaycentre.org/high-pay-hour-how-quickly-ceos-earn-the-uk-median-wage/

Why Does it Matter?

With the ongoing cost of living crisis for many employees, top pay is in the spotlight critically.  

Employee engagement might be damaged by insensitive or a glib disclosure explaining very significant pay differences. Inverting the High Pay Hour into the equivalent years of work for an average employee says the same, but is maybe easier to grasp...

In addition, the FT Lex column called for investors to "fix this shaming market failure." as, not only is the basis for executive compensation determination suspect, but the issue may also flag other poor company decisions.  

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Top pay is hugely different to average pay, both in quantum and mix.

The top to average mismatch calls for care in ensuring both that the decision on top pay opportunity is right, and that outcomes can be explained with a clear and compelling narrative.

The market for top talent exists, but it is not a perfect market. Information is uneven, talent is non-fungible, transactions costs are high and so on. In addition, the talent contribution to success is mixed with other factors. While other pay markets have similar issues, the management of top pay opportunity and outcomes must recognise the potential shortcomings.

For all these reasons Remuneration Committees must ensure they have impeccable process, good governance and have applied sound judgement.

In addition, the disclosure must lay out the policy and potential opportunity, along with the overlay of business, societal and shareholder wider factors, which have contributed to the outcomes 

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Please feel free to email or call:

Damian Carnell - [email protected]         +44 (0) 7989 337118 

VA Bec Bostock - [email protected]

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