The Latest Chartered Institute of Personnel and Development (CIPD)/High Pay Centre analysis finds that the average FTSE 100 CEO is paid £1,020 per hour and £3.926m a year, an increase of 11 per cent on the previous year.

The CIPD has labelled this Friday 4 January 2019 as “Fat Cat Friday” pointing out that in just three working days the UK’s corporate bosses make more than a typical full-time worker will earn in the entire year.

The average (median) full-time worker in the UK earns a gross annual salary of £29,574. “Fat Cat Friday” recognises that in 2019 the average FTSE 100 CEO, on an average (median) pay packet of £3.9m, only needs to work until 1pm on Friday 4 January 2019 to earn the same amount.

The CIPD and High Pay Centre highlight the problem of rising executive pay in a new report launched today, RemCo reform: Governing successful organisations that benefit everyone, identifies the shortcomings of the remuneration committees (RemCos) charged with setting executive pay and calls for them to be significantly reformed.

In particular, it highlights the myth of “super talent” as a factor that continues to drive excessive pay with one remuneration committee chair commenting: “It’s nuts… and nuts has become the benchmark”.

The report also seeks to address the issues of true diversity among those responsible for setting CEO pay – in the professional backgrounds and expertise employed to groupthinkp think.

The report is also critical of current pay mechanisms that contribute to the problem of high pay, recommending replacing long-term incentive plans (LTIPs) as the default model for executive remuneration with a less complex system based on a basic salary and a much smaller restricted share award. This would simplify the process of setting executive pay and ensure that pay is more closely aligned to executive performance.

The CIPD and High Pay Centre are additionally looking to measure contribution on both financial and non-financial terms, including employee well-being and investment in workforce training and development – all of which they believe are crucial for good corporate governance.

CIPD report here.

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