The latest study by the High Pay Centre reveals that the average top executive leading major companies in the UK now earns 130 times more than the average worker, marking an increase from 124 times last year and reaching an eight-year peak. The research indicates that the median annual pay and benefits for a CEO of a FTSE 100 company have surged to slightly over £5 million, showing an 8.6% rise from £4.66 million in the 2024/25 period.
Interim director of the High Pay Centre, Andrew Speke, emphasized the concerning growth in the wage gap between executives and workers over the past year, calling for attention to the issue of escalating executive pay. This marks the fourth consecutive year of increasing pay for FTSE 100 executives, surpassing the growth rate of worker salaries significantly.
Addressing the new Prime Minister, Andy Burnham, Speke expressed hope for a shift towards economic fairness under the new leadership, stressing the need to tackle economic inequality and excessive corporate compensation to prevent a decline in public trust in the economic system and the rise of right-wing populism.
Despite its efforts to shed light on excessive boardroom pay, the High Pay Centre is facing closure due to financial constraints. The research shows that 66 FTSE 100 companies raised their chief executive’s pay package compared to the previous year. The average increase of 8.6% in executive compensation far outpaces the 3.6% rise for the typical UK employee, who earns around £40,000 annually. In total, £856.6 million was allocated to FTSE 100 executives, with CEOs receiving £550.4 million.
Many large firms justify the need for generous salaries and benefits for top executives to attract talent and remain competitive globally. The High Pay Centre advocates for a “fat cat tax” system, proposing a corporation tax surcharge on profits if a boss’s total compensation exceeds a specified multiple of the median UK worker’s salary, with incremental tax rates based on the multiple thresholds.
In addition, the Centre calls for broader reforms to enhance employee participation in corporate decision-making, including having workers represented on company boards. It also recommends increased transparency in annual reports regarding pay structures, including details on employees earning below a living wage.