The chief executives of FTSE 100 companies that have tapped government support schemes through the coronavirus crisis received higher than average multiples of staff pay, according to new research.
A report by the High Pay Centre showed that the 11 FTSE 100 companies found to have used the schemes paid their chief executives an average of 80 times more than their median employee and 109 times more than their lowest-paid staff.
The High Pay Centre analysed the pay ratio disclosures made by 107 UK companies that have published their annual reports so far this year. Two-thirds of the FTSE 350 are yet to report.
The average chief executive of a UK company was paid nearly £3m last year — 55 times more than the company’s median employee and 78 times more than employees in the lowest quartile.
The report identified 39 FTSE 350 companies that had benefited from government support during the pandemic, either through the job retention scheme or a short-term loan from the Bank of England.
Among those companies the pay ratios were also higher than average: 60:1 for chief executive to median employee salary and 78:1 for chief executive to lower-quartile employee.
The report found that a 3 per cent reduction to the pay of employees in the upper quartile could fund a median pay rise of £2,000 for the lowest earning quartile of employees.
“People increasingly recognise that we need an approach to pay in this country that rewards people more fairly,” said Luke Hildyard, director of the High Pay Centre.
“The new disclosures make it harder for big companies to argue that pay rises for their lowest-paid workers are unaffordable, given the potential to fund increases through slight rebalancing of pay awards from the highest earners to the lowest.”
New regulations starting this year require all publicly listed UK companies with more than 250 employees to disclose chief executive pay ratios in their annual reports. The new figures show the relationship of the chief executive’s pay relative to pay at the 75th, median and 25th percentile of the company’s UK employees.
The report comes amid warnings about the threat of widespread unemployment when the government’s furlough scheme begins to wind down from August. The scheme covered nearly 9m workers who were unable to do their jobs because of the pandemic. Redundancy proceedings are expected to start this month.
“This is taxpayers’ money and it’s reasonable to expect that firms receiving it are seen to manage their employees in a way that is fair and that they open themselves to public scrutiny over their people management practices,” said Charles Cotton, senior pay reward adviser at CIPD.
The High Pay Centre found that of the companies that had published annual reports so far, gambling group, GVC Holdings, had the widest differential between chief executive and median employee pay, of 229 times.
BP had the highest ratio of chief executive to lower quartile employee pay, of 543:1.