The pay for chief executives of UK FTSE 100 companies has now grown to 185 times the average wage.
Executive pay has more than quadrupled in the last 13 years. The average salary of a FTSE 100 executive has risen from £1 million in 1998 to £4.8 million in 2011.
In the past 12 months, chief executives have been given average annual pay rises of 12 per cent taking their pay levels to an average of £4.8 million, according to a new report from the High Pay Centre.
This is despite many of the firms share price falling and the economy only just climbing out of a double-dip recession.
Most employees in the UK have had to make do with pay increases of around 1.5 per cent for the last two years, well below the average rate of inflation and many public sector and private sector employees have suffered pay freezes in the last two years.
The High Pay Centre blames the government for failing to act to curb excessive executive pay.
The report found that it was not basic pay that has risen the most, but long-term incentive plans, share options and bonuses. In the last ten years, basic pay is up by 63.9 per cent but bonuses were up by 187 per cent.
Earlier this year, when many FTSE 100 companies were announcing their annual results, the “shareholder spring” emerged whereby shareholders and institutional investors voted against the remuneration packages awarded to FTSE 100 bosses when pay was not matched by the performance of the company.
High profile casualties of this phenomenon included Andrew Moss at Aviva and Sly Bailey at Trinity Mirror. However, the report says that these were isolated cases and that institutional investors find it difficult to work together to vote against high pay for poor performing companies.
In its foreword to the report The High Pay Centre said: “Shareholders have started to take a stand on rewards for failure. During the much-heralded shareholder there has been a flurry of protest votes over pay, although this has tended to reflect isolated cases of concern rather than a more general push-back over top pay awards.”
The High Pay Centre went on to say that it believes little has changed and executive pay deals remain “complex and hidden from public scrutiny.”
The report said that “despite promises of action, little has changed.”
It concludes by saying: “The situation is getting worse. Those at the top of the income scale are getting richer as the majority of British citizens are experiencing a squeeze in their standard of living.”