Sir Martin Sorrell. Photo: WORLD ECONOMIC FORUM/ swiss-image.ch/ Photo RÈmy Steinegger (under creative commons)
The 45-minute salary: Why we need worker reps on boards
Sir Martin Sorrell is the Chief Executive Officer of WPP, the multinational advertising and PR firm. He’s also retained his place this year as Britain’s highest paid CEO, drawing nearly £70 million in 2015.
For those who are used to somewhat fewer zeroes on their pay slips, this might be hard to take in, but it’s actually more than 2,500 times the average UK salary. £38,437 an hour. Or to put it another way, Martin Sorrell gets an average year’s salary for just 45 minutes’ work.
And he’s not alone. The median total pay (excluding pensions) of top FTSE 100 directors hit £3.4 million in 2015, having increased by 47% since 2010.
But by contrast, average wages for workers rose just 7% over the same 5 year period and are still way down in real terms on their pre-crash level.
The pay gap keeps on growing and growing. In 2010, the average FTSE 100 boss earned 89 times the average full-time salary. By 2015, this had risen to 123 times.
This only highlights why Theresa May has to deliver on her promise to tackle executive pay, by putting workers on company boards and remuneration committees.
But we also need her to compel companies to disclose full information about employee pay and the ratio between the CEO’s pay and the average.
Companies with high pay inequality between bosses and workers perform less well. But employees and investors currently don’t have access to robust information that would allow them to assess the gap between top directors and staff in the rest of their company.
Other European countries already require workers on boards, so UK firms have nothing to fear. It improves performance and contributes to companies’ long-term success.
Allowing a worker voice at the top table would inject a much-needed dose of reality into boardrooms and help put the brakes on the multi-million pay packages that are damaging the reputation of corporate Britain.