The average median pay for Financial Times Stock Exchange (FTSE) 100 chief executives is now £5.06 million a year – a shocking 130 times more than the average full-time worker earns, new figures from the High Pay Centre show.
With CEO salaries increasing for a fourth year on the trot – driven in part by inflating bonus payments – the figures are being framed as a wake-up call for policymakers.
Yet, with over a third of small business owners struggling to pay themselves, the picture looks a lot different down the scale.
So, what’s the balance between fairness, survival, and reward? We take a look at what founders should actually be paying themselves, based on business stage and industry norms.
FTSE 100 CEOs are paying themselves over £5m a year on average
For top CEO’s, rank definitely has its privileges. New research from the think tank the High Pay Centre has found that the median average pay for a chief executive of a FTSE 100 company has reached a new record of over £5 million a year.
This figure is 8.6% up from £4.66m in 2024/25, when CEOs earned 124 times more than the average worker – that ratio has now climbed to 130 times.
Top earners include CEO of AstraZeneca Pascal Soriot, earning £17.7 million, and CEO of GSK Emma Walmsley, who took home £15.7 million in the past year.
In comparison to their multi-million-pound earnings, it was found that full-time employees in the UK are paid an average of under £40,000 a year, and are seeing their pay packages increase 5% more slowly than top bosses.
While pay-setting committees at big firms argue competitive salaries for top-dogs are necessary to compete with other countries like the U.S., Andrew Speke, interim director at the High Pay Centre, says the figures should stand as a “wake-up call to those who’ve turned a blind eye to rising executive pay”.
The answer? The High Pay Centre believes it lies in a “fat cat tax”, which would involve firms paying a corporation tax surcharge on their yearly profits if the total pay exceeds a specified multiple of the average worker’s salary.
According to Speke, “Not only would this incentivise firms to scale back the levels of corporate wealth flowing to a small handful of individuals but also could be used to raise funds to be invested in education and early years provision, helping to tackle inequality at source”.
How much do small business owners actually earn?
Unlike FTSE 100 CEO’s most founders are working out how to portion a wage without sinking the business.
When it comes to how to pay yourself as a business owner, things will look a lot different depending on your business structure. For instance, sole traders draw from their profits, partners split the share, and limited company directors combine a modest salary with dividends.
According to Glassdoor, most small business owners earn around £39,000 a year, though totals can range anywhere from £28,000 to £54,000 depending on experience, industry, and how established the business is. Early-stage founders often pay themselves considerably less, or nothing at all, to keep the business viable.
This isn’t the only survey indicating small business founders are taking home very little. Research from the Federation of Small Businesses (FSB), for instance, found that 36% of small business owners made less than £25,000 in gross profit over the past year. According to recent figures from Payscale, which looked at gross pay, UK CEOs earn around £73,178 per year – just 2.2 times the average UK employee salary.
To put things into perspective, this is only just above the average salary of a full-time worker on the National Living Wage (£22,200), and a world away from the multi-million-pound packages awarded to chief executives at the UK’s biggest firms. So, while the FTSE 100 figures have made all the headlines, lower down the chain, things look a lot more balanced.
How to pay yourself – and your team – fairly
If you’re a founder considering giving yourself a salary bump, you should first ask yourself some tough questions. Has your business has consistently been profitable for over six months? Are your debts covered? Are you capable of taking more out without dipping into reserves, and how will doing so impact your runway? If you’re not considering these things, it could end disastrously.
Consistent scheduling is also important. You shouldn’t be paying yourself on an “as and when” basis – it should be measured, controlled and calculated. This should be paired with regular reviews, where you revisit how much you’re taking out and whether this is optimal in the context of your business’s trajectory. Distributing profits throughout the year will allow you to adjust this easily.
It’s also important to look at the company-wide picture. Staff teams dutifully contributing to rising profits – and only seeing your lifestyle change, rather than the team grow – will naturally breed resentment and may ultimately impact turnover. It’s essentially the old adage of leading by example – taking lump sums out of the coffers whenever you please isn’t going to engender good tea morale.
To put it another way, when you’re a founder, there’s a lot more to consider than just how much you’re taking home.
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