In 1965, the CEO-to-employee compensation ratio at US companies was 20:1 – for every $1 earned by the average employee at a company, the chief executive at that company made $20. By 2021, the ratio was 399:1.
Although the pay disparity at UK companies is not quite as stark, recent figures show that not only is median executive pay at FTSE 100 companies more than 100 times that of the median full-time worker's pay (109-times greater, in fact), but CEO pay is also rising faster than the average worker's pay. CEO pay at FTSE companies increased by 16% in 2023. Meanwhile, according to the Office for Budget Responsibility, real wages for average full-time employees will not return to their 2008 value until 2028.
Statistics like these lead many people to question whether it's fair for chief executives to receive such generous pay packages. However, others believe that while executive pay may seem exorbitant, remuneration based on market rates is the only way for firms to attract the very best leaders and remain competitive.