I was scrolling through Twitter this morning when I spotted the front page of the Financial Times. The headline reads “Sorrell feels the strain as WPP is ‘walloped’ by ad spending cuts”.
The reason this caught my attention, was I’d recently presented the CIPP Payroll and HR Legislation Update course in Leeds and a section of the presentation relates to “CEO pay ratios reporting”.
Apparently, according to the House of Commons Library, Martin Sorrell, the CEO of WPP, was the best paid CEO in the UK. In 2016 he was paid £48,000,000!! Yes, 48 million pounds in one year, that’s 826 times more than the average pay of an employee. Believe it or not, his average is down when compared to the year before, in 2015 he was paid 1,336 times more than the average pay of an average employee.
The article can be found in the House of Commons Library. https://commonslibrary.parliament.uk/economy-business/work-incomes/pay-it-forward-the-meaning-of-company-pay-ratios/
The high levels of executive payments have been subject to general debates for many years, but the government has now expressed concerns as the rate of the increases, certainly over the last two decades, in executive payments when compared to pay generally. So, the government is now starting to act. In August 2017, the government announced new reforms which include:
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Financial Reporting Council (FRC) to revise UK Corporate Governance Code
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Require *quoted companies to explain executive remuneration in context of wider pay
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New legislation to require annual reporting of ratio of CEO pay to average UK employee, with narrative
*Quoted companies are those listed on the Main Market of the London Stock Exchange.
In December 2017 FRC released its consultation document on reforms. http://frc.org.uk/getattachment/31897789-cef6-48bb-aea9-f46b8cf80d02/Proposed-Revisions-to-the-UK-Corporate-Governance-Code-Dec-2017-1.pdf
Interestingly, Richard Howson, CEO of Carillion, was paid £1.5 million pounds in 2016, he’s a local lad too, lives in Skipton according to The Construction Index website.
Thanks for reading!
Jo Marshall
Yorkshire Payroll Services Ltd