Cap executive pay at fixed multiple of lowest-paid staff

The government should consider requiring organisations to cap executive pay at a fixed multiple of their lowest-paid employee, according to a report by the High Pay Centre.

Hargreaves-Deborah-HighPayCentre-2013

Its report stated that different ratios could be applied to different sectors, based on the advice of businesses, employees and academic experts.



The report also proposed:

  • Representation for employees on organisations’ boards and the remuneration committees that set executive pay.
  • A national inequality target based on previous legally-binding commitments to reduce child poverty and carbon emissions.
  • Compulsory profit-sharing, so that if an organisation does well and the chief executive officer receives a large bonus payment, ordinary workers also receive a windfall.

Deborah Hargreaves (pictured), director of the High Pay Centre, said: “It’s time to get serious about tackling the executive pay racket.

“The government’s tinkering won’t bring about a proper change in the UK’s pay culture. We need to build an economy where people are paid fair and sensible amounts of money for the work that they do, and the incomes of the super rich aren’t racing away from everybody else.

A maximum pay ratio would recognise the important principle that all workers should share in an organisation’s success, and that gaps between those at the top and low and middle earners cannot just get wider and wider.”