The cost of living crisis is continuing to bite with price rises and shrinkflation eating into workers’ pay. But hope springs eternal for hard-pressed CEOs. Their pay rises are comfortably outstripping those of the rank and file. And this means the pay ratio is an ever-growing chasm.
The High Pay Centre, a think tank focused on pay, corporate governance and responsible business, has published a briefing on trends in executive director compensation, CEO-to-employee pay ratios and employee pay. The High Pay Centre suggests that a wide pay ratio can lead to poor business outcomes.
This is intended as an update on figures assessed in the High Pay Centre’s ‘CEO Pay’ and ‘Pay Ratios’ reports, providing data from FTSE 100 firms that have released annual reports with year ends after 1 April 2025. The sample contains 64 companies, meaning there is potential for change as more reports come out during the year.
The High Pay Centre believes it’s vital to consider how to allocate a corporation’s wealth. Bosses should ensure that jobs are secure, fulfilling and provide the necessary income for a good standard of living.
Pay ratio ever-widening
Median (half get more, half get less) CEO pay stood at £5.2m. This represents a 15% increase in a year for the same group of companies. The mean (everyone’s pay added up and divided by the number of people) was £6.2m. This is a 19.75% increase.
Across the eight industries in the sample, only technology saw a fall in CEO pay from the previous year.
UK employees’ pay growth is significantly trailing behind that of their bosses with median employee pay having increased 4.85% versus 15% for CEOs.
Among the sample companies, the pay ratio between a median CEO and median employee is 95:1. And, as things stand, that’s only going to increase.
Andrew Speke, spokesperson for the High Pay Centre, said:
The data in this initial update is both shocking and concerning. A 15% median CEO pay increase, at a time when real-term wages are stagnating and living standards falling, is in neither the country nor the economy’s best interests.
This reflects corporate short-termism at its clearest. Companies themselves should be concerned about these trends, as research shows that when CEO pay rises significantly faster than employee pay, firms may be more exposed to operational and reputational risks. These include staff turnover, weakened employee morale and absenteeism, all of which hold the potential to significantly undermine firm productivity.
Policymakers, regulators and companies must endeavour to ensure a balanced, fair and sustainable model of corporate reward that recognises the indispensable value of the workforce alongside executive leadership. Addressing pay gaps should not be viewed solely as a matter of fairness, but also as a vital step in building a resilient and productive business model.
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