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Companies to publish pay ratio of CEO to whole workforce

The government has called for public companies, listed on the stock exchange, to annually report the ratio of chief executive’s (CEO) pay to the average pay of their UK workforce.

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This comes as part of nine reforms the government has announced it wants to bring into effect by June 2018.

 

The Chartered Institute of Payroll Professionals (CIPP) has given an example of the CEO reporting called in for action.

 

It said a ratio of 50 means that the CEO is paid 50 times the average pay in the company.

 

A Parliamentary briefing calculates pay ratios in the UK based on available data for 319 companies (most of the FTSE 350).

 

In 2016, the average ratio between CEO pay and average employee pay was 57. The highest ratio was as high as 826 at WPP PLC (a world leader in advertising and marketing services), and as low as two at IP Group PLC (a group that partners with universities to build tech businesses based on intellectual property).

 

The CIPP said taken together, company size, industry and the volatility of CEO pay, this can largely explain a company’s ratio and changes from year to year. It is expected that these factors will feature heavily in the narrative that companies will be required to provide along with their ratios.

 

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