Every 4 January brings Fat Cat Day, the moment at which the earnings of a typical FTSE 100 company chief executive surpasses the average annual UK salary.
The invention of the High Pay Centre think tank and the Chartered Institute of Personnel and Development, the date is intended to draw attention to the vast discrepancy in British wages by underlining the fact that corporate leaders have already made more money than their typical employee will all year, just three working days into the new calendar.
The logic assumes cigar-huffing titans of industry on £3.9m a year only need to work three days – or 29 hours – to match the median salary for a British full-time employee of £29,574.
That’s a rate of £821.50 an hour and a ratio of 133:1, a deeply depressing thought in the week the nation trudges back to work with the post-Christmas blues.
Industry observers are keen to point out that while calling out executive pay may seem like an easy target for politicians, the responsibilities of a chief executive are huge and being able to offer large financial incentives is integral to ensuring British businesses remain competitive and are able to attract the best global talent.
The pro-business Adam Smith Institute has dismissed the whole initiative as “pub economics”.
On the other hand, the GMB union argues Fat Cat Day is valuable for highlighting the “simply obscene” fact that chief executives can make more than 100 times more than the average worker’s pay: “Big corporations are not going to volunteer to really rein themselves in, which is why we need greater restraint on the excesses of those at the top.”
While the GMB’s point rings true, chief executives cutting down on excess culture is not absolutely unknown: in 2016, Co-op boss Richard Pennycook asked for his salary to be cut by 60 per cent, from £1.25m to £750,000.
Having said that, Fat Cat Friday 2019 arrives after a year that saw a number of heavily criticised pay packets handed out to big executives.
Jeff Fairburn, boss of construction giant Persimmon, was asked to leave the company after news of his £75m bonus payout had a “negative impact” on the firm’s housebuilding business. He was originally granted a £100m bonus but, after a public backlash, agreed to reduce that sum by 25 per cent.
Outgoing BT boss Gavin Patterson meanwhile came under fire when he was awarded a pay rise and a £1.3m bonus just two weeks after announcing 13,000 job cuts.
But the new year has already seen rules introduced forcing large British companies to reveal pay ratios and explain any chasm in earnings between senior management and their staff.
Introducing the legislation, business secretary Greg Clark commented: “Britain has a well-deserved reputation as one of the most dependable and best places in the world to work, invest and do business and the vast majority of our biggest companies act responsibly, with good business practices.
“We do however understand the frustration of workers and shareholders when executive pay is out of step with performance and their concerns are not heard.”
The perspective Fat Cat Day offers and the debate it provokes regarding inequality and division in the workplace is certainly thought-provoking and timely in a moment of falling living standards, stagnation and ever-deepening Brexit unease.
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