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Highlights
FTSE 350 executives earn significantly more than median UK workers, new report shows
Mitie and Tesco rank highest in pay disparity between chief executives and employees
FTSE 100 firms show even larger gaps, prompting calls for pay ratio transparency
A new report sheds light on pay structures among companies listed on the FTSE 350, revealing a substantial income gap between chief executives and median employees. The High Pay Centre, an independent think tank, examined corporate pay data for the 2023–24 financial year, revealing widespread disparities that continue to raise questions across the business landscape.
The research compared median executive remuneration to that of regular employees, bringing renewed attention to fairness and corporate governance. Companies in the FTSE have been urged to increase transparency around these pay ratios, especially in light of economic challenges faced by much of the workforce.
Mitie and Tesco Top Executive Pay Gap Rankings
Among the most prominent examples highlighted, Mitie Group PLC (LON:MTO), which operates in cleaning, waste, and security services, recorded the widest gap. The firm’s top executive was compensated at a multiple many times greater than that of a typical employee, attributed in part to a one-off reward related to a key acquisition.
Tesco PLC (LON:TSCO) followed closely, with its executive compensation structure also drawing attention. Despite a decline in the most recent figures, the retailer maintained a high pay ratio, drawing scrutiny from various governance observers. Company representatives have responded by reaffirming commitments to fair remuneration practices and investments in broader workforce pay increases.
FTSE 100 Companies Report Higher Median Disparities
The gap between executives and employees was even more prominent among FTSE 100 constituents, where median CEO pay dwarfed typical earnings by a larger margin. When comparing earnings with the lowest-paid quartile within firms, the difference widened further, intensifying calls for reassessment of pay strategies.
High-profile cases in the energy and retail sectors illustrate how performance-linked bonuses contributed to earnings growth. For example, Marks & Spencer Group PLC (LON:MKS) saw a significant rise in compensation for its executive just ahead of a cybersecurity incident. Stakeholders continue to debate whether current pay structures sufficiently align with shareholder interests and broader economic conditions.
Banking Executives Benefit from Bonus Cap Removal
UK banking leaders are also expected to receive larger remuneration packages following the removal of the bonus cap in late 2023. NatWest Group PLC (LON:NWG) and Barclays PLC (LON:BARC) have proposed increases in executive pay ceilings, aligning with expanded performance targets. HSBC Holdings PLC (LON:HSBA) also joined this trend, announcing similar adjustments.
These changes reflect shifts in regulatory stance but have triggered debate about fairness and reward proportionality. The role of shareholders in shaping pay policies is gaining visibility, with recent shareholder meetings featuring votes against executive compensation recommendations.
Think Tank Advocates for Broader Pay Ratio Disclosure
The High Pay Centre has advocated for all FTSE firms to publish their CEO-to-worker pay ratios within annual disclosures. The think tank also recommended incorporating data from outsourced and contracted workers, which are often omitted despite contributing to the overall workforce.
