January 6, 2021
Pay cheques and the cityContact
The start of a new year can be a financially chastening period for a lot of people. Early Christmas payrolls mean a longer wait for January’s salary to arrive and many are forced to tighten their belts after overstretching themselves in order to buy that perfect present for loved ones. This year’s squeeze is being even more keenly felt after 2020 saw thousands made redundant, furloughed, or forced to accept reduced terms.
This background of pandemic parsimony and economic uncertainty makes High Pay Day 2021 even more incongruous than usual. To the uninitiated, by the close of play this Wednesday (6th January), bosses of Britain’s biggest companies will already have earned more than the average worker’s annual wage (£31,461). The figures are calculated by the think-tank High Pay Centre, which bases them on salary disclosures in annual reports, combined with government statistics. As it stands, chief executive pay is now about 120 times that of the average worker.
Building back better
The figures don’t make for comfortable reading, no matter how rigorously they are defended by those who argue that strong management is more valuable than ever in these unprecedented times and that the contribution of top executives needs to be measured by more than the salary they are paid. These are both valid points of course, but neither reduce the pressure on companies to be especially sensitive about how they are coming across in the current climate.
Much talk about any potential upside to emerge from the pandemic centres around the opportunity it provides for companies to ‘build back better’ and at the heart of this is a renewed focus on environmental, social and corporate governance. It’s no longer enough for this to be a footnote in an annual report; consumers expect full transparency and accountability from the companies they deal with and will vote with their feet accordingly.
Well-paid individuals in other walks of life have used their platforms for societal improvement and the redistribution of wealth and it’s something CEOs should be paying close attention to. Footballers often provoke public ire for the size of their pay packets, but the examples of Marcus Rashford’s school dinner crusade and captains from Premier League clubs joining forces for the #PlayersTogether scheme to contribute to the NHS shows that it’s never too late to shift perceptions and improve reputations.
It’s no longer enough for companies to be reactive on these sorts of thorny topics and hope the media doesn’t pick up on them. Modern businesses need to be on the front foot and fully accountable for all their processes and protocols. As has been evidenced by the ongoing difficulties in overcoming the pandemic, the only way out of this crisis is by people coming together for the greater good – a message that could equally apply to future discussions on executive pay.