Cap at 10

The median FTSE 100 CEO earned £4.58 million in 2024/25, according to the High Pay Centre, a record for the third consecutive year. Of that figure, somewhere between £800,000 and £1.2 million typically arrives as base salary. The rest comes through annual bonuses (averaging £1.61 million, paid to 93% of FTSE 100 CEOs) and Long-Term Incentive Plans (LTIPs), equity instruments that vest over several years, averaging £2.26 million, received by 84% of executives. LTIPs are equity instruments, grants of shares and options in the company, often conditional on performance targets and sometimes paid out years after they are awarded.

A rule that caps "the highest-paid employee" at 10 times the lowest wage constrains roughly 20 to 25% of what a FTSE 100 CEO actually earns, unless it explicitly captures all forms of remuneration: bonuses, deferred cash, vesting shares, carried interest, options. The Green Party's published materials describe capping the highest-paid employee's pay without specifying whether LTIPs and performance bonuses are in scope. That ambiguity is not a footnote. The EU's banker bonus cap, introduced in 2014 under the Capital Requirements Directive, limited variable pay to twice fixed salary. The European Banking Authority's own monitoring found that the ratio of variable to fixed pay for affected staff dropped from 104% to 65% in the first year, but total remuneration did not fall. Banks raised base salaries to compensate. The cap redistributed remuneration between its components without reducing the total.

The most straightforward response to a 10x pay ratio rule is not cutting the CEO's pay but ensuring the company's lowest-paid direct employee earns enough that the cap does not bind. There is a simple way to achieve this: stop employing low-paid workers directly. FTSE 100 companies already contract out cleaning, catering and security functions to specialist service providers such as Mitie, ISS and Sodexo. Those workers carry out their duties in the company's offices and warehouses, but they are employed by the contractor, not by the company. Under a 10x rule applied to direct employees, that existing structure becomes additionally advantageous: the denominator improves without any change to what those workers earn.

LSE research tracking FTSE 100 pay structures from 2000 to 2015 found that outsourcing of low-paid functions grew from 15% of firms to near-universal over that period, while CEO stock-based compensation rose from 39% to 79% of the total package. The two trends moved in parallel: as companies contracted out the workers at the bottom, executive pay decoupled from all-employee wages and tied itself to share price instead. A rule designed to re-link those two figures would accelerate the process at its margin. Firms that have already outsourced low-wage work start with a compliance advantage, while those that have not face a direct financial incentive to follow. The workers at the bottom of the in-house payroll are the ones who pay for the compliance.

It is worth being clear about what this means in practice. A facilities manager employed directly by a bank has access to that bank's pension scheme, sick pay entitlements and in-house HR functions. Employed by a contract cleaning company instead, she has the terms that company offers, which at the lower end of the market are generally worse. The policy's reach ends where her employment does.

Not all minimum-wage work can be contracted out to a third party. A supermarket cannot send its checkout function to a facilities company; a logistics firm cannot subcontract its warehouse pickers while keeping them on site under a different brand name. For these employers, the 10x rule creates a different adjustment: replace the minimum-wage role with a machine, and the denominator rises automatically.

Self-checkout, automated conveyor and sorting systems, and robotic goods-to-person picking have all been advancing on their own commercial logic. Amazon, Ocado and most large supermarkets have been deploying them for years. A statutory pay ratio cap adds a regulatory incentive that did not previously exist, given that each minimum-wage worker remaining on payroll places a ceiling on executive compensation that disappears when they are replaced by a machine. Workers most exposed are those in routine physical roles already at the frontier of automation economics. Whether the cap would actually tip any given firm's investment decision is impossible to say with confidence, but the incentive structure points one way.

No reliable estimate of the scale exists. Academic research on automation consistently finds that job losses concentrate in routine, lower-wage occupations, which are precisely the roles the pay ratio rule uses as its floor.

In November 2013, Swiss voters considered the 1:12 Initiative, a proposal by the Young Socialists to cap the highest-paid employee in any company at 12 times the salary of the lowest-paid. The initiative had cleared the 100,000-signature threshold, was backed by a serious political movement, and entered the ballot with apparent majority support in pre-vote polls. On the day, 65.3% voted against.

The arguments that shifted opinion were largely about mechanism. Critics made the outsourcing point explicitly: a 12:1 rule would reward companies that moved their lowest-paid staff to contractors or franchise arrangements, removing them from the calculation while leaving their pay unchanged. In a political culture accustomed to examining policy in some detail before voting on it, a majority concluded the initiative did not achieve what it proposed.

The YouGov polling from 17 April 2026 reports 65% of British adults supporting a 10x equivalent. That figure captures support for the principle that the gap between the top and the bottom of a company's pay scale should be bounded, without engaging the specific mechanism, its avoidance routes, or its effect on the workers it nominally benefits. The Swiss contrast is suggestive rather than conclusive (different country, different year, different question framing, referendum rather than survey). But it points to a gap between support for a principle and support for a mechanism that has been examined at length.

Four years of mandatory pay ratio disclosure under the Companies Act 2018 have already revealed how elastic a denominator becomes when firms apply it. FTSE 350 companies are required to publish their CEO-to-worker pay ratios annually, using median, lower-quartile and upper-quartile employee benchmarks. The High Pay Centre's analysis of the first set of disclosures found ratios ranging from 8:1 to 2,605:1 across the index, with the variation attributable partly to genuinely different business models and partly to methodological choices in how part-time and seasonal workers are annualised.

A hard statutory cap extends the stakes of those choices considerably. Whether "lowest wages in that company" means the lowest hourly rate or the lowest annualised pay is not a minor technical point. A zero-hours worker at the National Living Wage (£12.71 per hour from April 2026) earning 520 hours of work in a year takes home £6,609 annualised on actual hours worked. A full-time equivalent at the same rate earns £26,437. Under a 10x rule, the CEO ceiling is either £66,090 or £264,370, depending on which figure the company is permitted to use. The gap between the two methodologies is roughly £198,000, which is the financial value of the scheduling incentive the definition creates.

The historical record on compensation regulation is not encouraging. In 1993, the Clinton administration introduced a $1 million cap on the tax deductibility of executive salaries. Academic analysis found that CEOs whose pay was below the threshold raised their base salaries toward it, while those above shifted into performance-based equity, which was explicitly exempted, and total executive pay rose as a result. When the EU capped banker bonuses, fixed salaries rose in compensation. When the SEC mandated pay ratio disclosure in 2018, firms used every permitted discretion to present their ratios favourably without measurably reducing CEO compensation. Caps on one form of remuneration reliably produce substitution into others.

A serious version of the policy would try to close the obvious routes: define pay on a total-remuneration basis, include agency and contracted labour in the denominator, apply the rule across the consolidated group rather than the legal employer alone. Each fix is available in principle. Each also makes the cap more complex, more contestable in court and harder to administer, without resolving the underlying problem that firms adjust at organisational margins, and those margins are closest to the lowest-paid workers.

Supporters of the cap sometimes argue that the point is not to micromanage every behavioural response but to change social norms around extreme executive extraction, shifting board culture even where the rule is imperfect. That argument has some force. It does not follow, though, that a poorly specified rule improves outcomes for the workers it nominates as its beneficiaries. The adjustment margins that make the rule avoidable are also the margins where low-paid employment is most precarious.