Online grocer Ocado paid its chief executive about 2,600 times its average worker last year, according to new research that shows the yawning gap in wages between the boardroom and the shopfloor across British industries.
Retailers Tesco and JD Sport, and gambling group GVC, were also among the UK companies with the biggest gap between pay for their chief executives and the average worker, according to a report by think-tank High Pay Centre and the Standard Life Foundation.
Overall, median pay among chief executives in the FTSE 350 was 53 times that of the median employee, ranging from a ratio of 140:1 in the retail trade to 35:1 in financial services.
Ocado said last year’s pay ratio was distorted by the one-off effect of a maturing incentive scheme that resulted in chief executive Tim Steiner receiving a £58m payout.
Companies were forced for the first time to disclose the ratio of chief executives’ salaries to pay at the 75th, median and 25th percentile of the company’s UK employees in their 2019-20 annual reports.
The research uses data from the 186 FTSE 350 companies covered by the pay ratio reporting requirements, which exclude closed-end investment funds and companies with fewer than 250 UK employees.
The FTSE 350 companies with the lowest pay levels at the 25th percentile point of their UK workforce include Dunelm, William Hill, Domino’s Pizza and JD Sports.
Almost a fifth of companies pay workers in the lower quartile of wages less than £20,000, according to the report. The median pay ratio of FTSE 100 CEOs to lower quartile employees is 109:1, but across the FTSE 350, the ratio sizes range from 2,820:1 to 13:1.
“These findings show that quite low levels of pay are commonplace for large numbers of workers at many of our major companies,” said High Pay Centre director Luke Hildyard. He added that the research should prompt investors and companies to “think more deeply about how to improve fairness at work, and pay for low-paid workers in particular.”
Standard Life Foundation chief executive Mubin Haq said pay differences were most stark in the retail sector. “During the pandemic the industry either relied heavily on government support or made significant profits. Rewards are not being fairly shared but companies can begin to make plans to reduce the gaps that exist.”
About 3m Britons work for retailers, the majority in shop floor or warehouse roles that are paid by the hour. Tesco, which has a UK workforce of more than 300,000, said it “aims to reward responsibly and fairly, so that all colleagues, including executives, are rewarded competitively against the market for their role, and that everyone shares in the success of the company”.
The hourly rate at the company is £9.30, above the statutory national minimum wage for over-25s of £8.72.
Ocado said its lower quartile figure was heavily influenced by hourly paid staff “which represent the vast majority of our employees”. Basic hourly pay rates range from £9.20 to £12.65.
At JD Sports, which had the second-highest ratio of CEO to median pay, executive chair Peter Cowgill was awarded a £6m cash bonus that drew criticism from independent shareholders.
GVC, now known as Entain, cut its former chief executive Kenny Alexander’s pay by £150,000 following pressure from investors last year, although he still received a £2m bonus and £1.8m long-term incentive plan.
Leicester-based homewares retailer Dunelm said hourly-paid staff received above statutory minimum levels and a one-off £250 bonus “in recognition of their contribution throughout the Covid-19 crisis”.
William Hill said the report was “highly misleading” and that the company paid all of its employees at or above the statutory national minimum wage. It also noted that it had topped up the pay of staff put on furlough during the pandemic and had later paid back £24.3m in furlough funds to the government.
Domino’s and GVC declined to comment.
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