The best paid FTSE 100 executive received more than 1,700 times the average UK wage last year, an analysis by FactCheck shows.
Sir Martin Sorrell, who runs the advertising and marketing giant WPP, earned more than £48m, including perks and pension.
Overall, the highest earning executives in each of the FTSE 100 firms were paid an average of more than £4.5m each.
That’s more than 160 times the UK average earnings – and 262 times the Living Wage.
Our analysis follows new plans by the government to tackle “excess in the boardroom”. The UK’s biggest corporations will be forced to say how much more their chief executives earn compared to their average employee.
The prime minister, Theresa May, said that a “small minority of executives narrowly put their own short-term interests first,” with pay rises that “far outstrip the company’s performance”.
The new transparency measures will give us a more detailed look at the wage gap of big corporations. But, in the mean time, we looked at existing data to build a picture of the issue.
Executives Vs. employees
We looked at the latest available financial accounts of every FTSE 100 company. Each firm lists the total earnings of its highest paid director.
This is usually made up of multiple components on top of their basic salaries, such as incentives, bonuses and pensions. So although pay packages may not be directly comparable, this figure gives us the overall amount they received.
The vast majority of these companies had at least one director who earned more than £1m. But many directors received far more.
Thirty of the companies paid more than £5m to at least one of their directors. And the top five executives earned £99m between them.
Although the accounts don’t give details on the average or lowest paid staff, we can compare the figures to UK averages, as well as the Living Wage and Minimum Wage.
Sir Martin Sorrell is not alone among FTSE executives to have earnings that eclipse typical wages in the UK.
Well known firms like BP, Unilever and the pharmaceutical firm Astrazeneca are among those with the highest paid directors.
However, it is important to note that this is a comparison with median UK earnings, rather than a reflection of average earnings within each company. That data is not available.
Sir Martin Sorrell and WPP
Sir Martin’s total pay packet has totaled more than £200m over the last five years, but he has defended his earnings, saying it is “pay for performance”.
He said last year: “I’m not a Johnny-come-lately who picked a company up and turned it round. If it was one five-year plan and we buggered off, fine [to criticise my pay]. Over those 31 years … I have taken a significant degree of risk. [WPP] is where my wealth is. It is long effort over a long period of time.”
Company accounts do not appear to state the average salary of its staff, or how much its lowest paid employees are on. So it is difficult to compare Sorrell’s earnings to others with pinpoint accuracy.
However, WPP’s latest annual report says: “The vast majority of our people already earn significantly above the voluntary living wage rate. However, wage rates in our supply chain may be lower.
“It is our policy for WPP, the parent company, and all our UK companies, to pay the voluntary living wage set by the Living Wage Foundation to all employees and all on-site contractors such as cleaning, security and catering staff in the UK. Our policy is to only offer paid internships and apprenticeships.”
Many adverts for jobs at companies within the WPP empire do not state the salary, so it’s hard to say what the lowest paid employee is on.
However, we did find an advert for a graduate scheme with part of the business group.
The role, which is based in London, pays £19,012 gross per annum. That’s 2,533 times less than Sir Martin.