Which companies are required to report their executive pay ratio?

The Companies (Miscellaneous Reporting) Regulations 2018 (SI 2018/860) introduce a requirement for quoted companies with more than 250 employees to publish the ratio between their CEO's total remuneration and employees' pay and benefits in their directors' remuneration report.

The Companies Act 2006 defines a "quoted" company as a UK incorporated company that has shares quoted on:

  • the UK Official List;
  • the New York Stock Exchange;
  • NASDAQ; or
  • a recognised stock exchange in the European Economic Area.

The definition does not include a company listed on the Alternative Investment Market.

The 250-employee threshold refers to the average number of employees working for the company throughout the relevant financial year. The average is calculated by:

  • finding out the total number of employees for each month of the financial year;
  • adding the total number of employees for each month together; and
  • dividing this total by the number of months in the company's financial year.

Only UK-based employees engaged under a contract of service by the company need to be included in the calculation. The number of hours the employee works is irrelevant for these purposes, meaning that employees who work under zero-hours contracts should be included.

Employees who work wholly or mainly outside the UK do not have to be included, nor do contractors, consultants or agency workers.