Refer to Fig. 2.
Explain why this relationship may exist.
Research shows the ratio of Chief Executive pay ('remuneration') to median employee remuneration in the UK has changed significantly over the past decade (see Fig. 1). In 2021, Chief Executives at FTSE 100 firms earned 110 times more than a typical employee.
Fig. 1 Chief Executive-to-employee remuneration ratio (UK), 2012–2021
| Year | Ratio |
|---|---|
| 2012 | 85 |
| 2013 | 90 |
| 2014 | 115 |
| 2015 | 100 |
| 2016 | 110 |
| 2017 | 120 |
| 2018 | 115 |
| 2019 | 118 |
| 2020 | 95 |
| 2021 | 110 |
Source: High Pay Centre
Chief Executives at FTSE 100 companies earned an average of £4.5 million in 2021, an 18% increase from 2020. In that same period, the UK stock market index (FTSE 100), which shows changes in the share prices of large UK companies, also recovered significantly (see Fig. 2).
Fig. 2 Chief Executive remuneration and stock market performance (UK), 2012–2021
| Year | UK FTSE 100 index (LH axis) | Chief Executive remuneration, £m (RH axis) |
|---|---|---|
| 2012 | 5800 | 3.2 |
| 2013 | 6200 | 3.5 |
| 2014 | 6500 | 4.1 |
| 2015 | 6300 | 3.9 |
| 2016 | 6700 | 4.3 |
| 2017 | 7200 | 4.8 |
| 2018 | 7400 | 4.7 |
| 2019 | 7500 | 4.9 |
| 2020 | 6400 | 3.8 |
| 2021 | 7100 | 4.5 |
Source: High Pay Centre
