High pay: analysis of pay ratios in the UK
High Pay Centre
Since 2020 all quoted public companies with more than 250 UK employees have had to provide pay ratios between their highest earner and pay at the 25th, 50th and 75th percentile of their UK workforce. This measure was brought in by the Conservative government with the aim of providing greater transparency on pay. These reports analyse the new pay ratio disclosures.
This report on pay ratios within FTSE 350 companies finds pay ratios fell during the pandemic, which company bosses taking home lower salaries. However, early indications show this trend will not continue, analysis of recent annual reports shows in increase in pay ratios. In brief, it found:
● The median CEO/median employee pay ratio across the FTSE 350 was 44:1 in 2020/2021, down from 53:1 in 2019/2020. 2020/21 also saw a decrease in the median CEO/lower quartile employee pay ratio for the FTSE 350, at 59:1 compared to 71:1 the previous year.
● In the FTSE 100, the median CEO/median employee ratio was 67:1 and the median CEO/lower quartile employee ratio was 93:1 (73:1 and 109:1 in 2019/20)
● 27 Companies (13% of the total) had a CEO/median employee pay ratio of over 100:1, compared to 45 in 2020.
● Pay gaps are set to rebound post pandemic, with the 69 companies to have reported in the first quarter of 2022 showing a median pay ratio of 63:1, almost double the 34:1 median ratio at these companies in 2021.
The High Pay Centre's first report on pay ratios was published in December 2020. For the first time the report analysed new pay ratio disclosures, it found:
● At 17% of FTSE 350 companies, at least a quarter of UK employees are paid below the annualised equivalent of the London Living Wage (£19,565).1 18% of companies pay lower quartile workers below £20,000 (on an FTE basis)
● Median pay ratio of FTSE 100 CEOs to lower quartile employees is 109:1. Across the FTSE 350, ratio sizes range from 2,820:1 to 13:1.
● Across industries, average CEO/median employee ratios range from 140:1 in retail to 35:1 in financial services