Bosses of Britain’s biggest companies saw their salaries rise by an average of 16% in 2022 at the same time as ‘ordinary’ workers saw their own salaries being squeezed by the cost of living crisis.
According to The High Pay Centre, the median salary of a FTSE chief executive last year was £3.91 million, up from £3.38 million in 2021. Ordinary worker’s salaries, on the other hand, were 118 times less at an average of £33,000 annually. Some have called the executive’s salaries as “extreme” but the companies in question have hit back, saying the earnings are in line with competitors and also reflect the responsibility of the job the recipients are performing.
The highest-paid of the chief executives was Sir Pascal Soriot, who runs the pharmaceutical conglomerate AstraZeneca, receiving a total payout last year of £15.3 million, with Charles Woodburn of aerospace firm BAE runner-up in salary, taking home £10.7 million in 2022.
The High Pay Centre, which is a think-tank tracing executive salaries, reported that median pay for high-ranking chief executives was up £500,000 on 2021 figures. They account for the rise because of economic recovery following the covid lockdowns in addition to bosses’ bonus and incentive programs tied to profitability and share prices.
The high salaries have been criticized by trade unions TUC and GMB, who lambasted the payouts as “extreme” and proof that “Britain was a land of grotesque extremes”.
Such hyperbolic statements do nothing to objectively assess the underlying reasons for the salaries, with The Adam Smith Institute injecting some common sense into the debate by saying that “knee-jerk” reactions to the salary disclosures were “unhelpful” and didn’t take into account the benefits of the wider economy.
AstraZeneca themselves have jumped into the fight, stating that Sir Pascal Soriot’s salary was only 12% fixed with the remaining 88% consisting of share price and performance-related incentives and bonuses. They also state rather pointedly that Soriot’s payout is considerably less than other major chief executives of rival pharmaceutical companies.
Oil companies, usually the prime target of complaints against chief executive salaries and company profits, have also – and predictably – come under fire for Shell chief executive Ben van Beurden and BP chief executive Bernard Looney receiving £9.7 million and £10 million, respectively, in payouts last year. A spokesperson for Shell defended the payouts, stating that “executive remuneration was benchmarked against a broad range of European multinationals”, with Mr van Beurden’s payout consisting of basic salary, long-term incentives, bonuses, onion, plus other taxable benefits.
Outside of the big beasts of corporate culture, normal workers have struggled to make ends meet in the biggest cost of living crisis for generations, with median salaries failing to keep up with the rising price of food, fuel, and utilities. Inflation in the UK is currently at 6.8%, down from the high of 11.1% last October. This decrease, however, has not affected a rise in overall prices, which have increased around 10% since last year.
The Adam Smith Institute, while acknowledging the squeeze on worker’s salaries because of rising prices, nonetheless said that chief executive salaries were “all too often criticized without further thought”. “16% is a marked increase. But company leaders provide value to customers with the products and services they sell, to pensioners with dividends from profits they generate and to HMRC through tax receipts,” he said. “Knee-jerk attacks remain an unhelpful way to look at the private sector which employs over 80% of workers in the UK and generates benefits across society.”
With the chances of a UK general election called in the next 12 months increasingly high, and polls showing the next government to be a Labour one, no doubt chief executive salaries in comparison to normal worker’s salaries will continue to be an active front in the ongoing culture wars.
