Fatcat Day will fall on New Year's Day in the absence of reform

Theresa May promised a City shake up but has subsequently backtracked, and CEO pay looks set to continue its unchecked rise

Bosses will rake in a median salary of £28,200 by midday, according to the High Pay Centre (Getty)

How long will it take before the average CEO earns in a day what the average worker earns in a year, when what the High Pay Centre has designated as Fatcat Day becomes New Year’s Day?

Right now, 4 January is Fatcat Wednesday, at which point a typical FTSE boss will have made £28,200. That is what the usual worker will make through the whole of 2017.

The Centre has been conducting this exercise for a number of years now, to highlight the yawning, and growing, gap between the money made by those at the top when compared to the money made by the people they employ.

It’s an important issue because Britain is becoming an increasingly unequal society and unequal societies are unstable societies. Unstable societies throw up bad things. The Brexit vote and the anger that accompanied it arguably being one of them. And that might be just the start of it.

The typical Briton feels the system is tilted against them, and watches aghast as their own take home remains static while that of the boss soars. What makes it worse is that there is nothing to logically justify the relentless rise in CEO pay.

As the Centre points out in its release, research from Lancaster University Management School has revealed that the link between pay and performance is negligible.

Bonuses are paid year in year out, with little apparent reference being made to company performance, and remuneration companies shower free shares on their executive charges like so much confetti via complex and woolly “long term incentive” schemes that aren’t very long term but have played a key role in the rapid rise in bosses' awards.

Blah blah blah, executive talent, blah, blah, blah, hire the best people. What, you mean talent like Philip Clarke at Tesco? Or even Marc Bolland at M&S, who led the shares up to the top of the hill and then right back down again? Or large parts of the banking industry a few years ago? I could go on.

Remuneration committees that pay people like these, and others, are typically made up of former executives, private equity types and accountants, who have all benefited from a crooked system and have little incentive to change it.

They are advised by consultants, whose first interest is in retaining business. They also have scant interest in rocking the boat.

Big shareholders do occasionally make a mild fuss, about the really outrageous awards. But here’s the thing: institutional fund managers that actively manage portfolios for investors are also very well paid with little apparent link to performance. Rare is the actively managed fund that can say it has beaten the relevant stockmarket index over the long term, and after charges have been taken into account.

So it’s not in their interest to make too much of a fuss either, otherwise people might start raising uncomfortable questions about their own bonuses.

But fear not! We’ve got Theresa May on our side, haven’t we? A tough as nails PM with the gumption to break it up, and restore some sanity to the City?

Tapping into the widespread anger against “elites”, Ms May initially indicated that she would do this, promising a corporate revolution that would lead to a Britain that works for everyone not just the few. We were going to see workers on boards, a requirement on companies to publish pay ratios, binding votes on pay, and more besides.

But, in the face of a fierce backlash, Ms May has been backtracking faster than Usain Bolt with a rocket pack on his back.

The green paper on corporate governance reform that has emerged has already proven to be a bit of a damp squib. And remember, it’s a green paper. A discussion document that will inevitably be further revised (read watered down).

The City's unhappiness over “Brexit means Brexit” pales by comparison to what it feels about politicians who threaten to take its top people’s sweeties away.

What we’ll end up with when the green paper becomes a white paper is a little tinkering around the edges of a framework that has allowed the current boom in bosses pay to continue unchecked.

The median average of FTSE chief executives’ pay used by the Centre, has the effect of filtering out the really enormous packages at the very top. Were Sir Martin Sorrell’s £70m included in a calculation of the mean average, we would be talking about this a day earlier.

For Sir Martin, Fatcat Day is New Year’s Day. It probably won’t be all that long before Fatcat Day is New Year’s Day for the rest too.