CEO pay reaches record levels
The bosses of Britain's largest listed companies received record pay last year, fueling the widest earnings gap with workers in eight years. Median pay for FTSE 100 chief executives hit £5.06 million in the last financial year, according to data released by the High Pay Centre, an 8.6% increase on £4.66 million the previous year and the highest level on record.
Executive remuneration has been rising steadily since the pandemic, when CEOs took pay and bonus cuts as lockdowns affected business performance. Analysis found that listed company bosses are now paid 130 times the salary of the average full-time UK worker, up from 124 times in the previous financial year. It is the biggest gap since the ratio hit 137 in the year to the end of March 2018.
Total spending on CEO pay
The High Pay Centre said FTSE 100 firms had spent £856.6 million on pay during the last financial year, including £550 million remunerating chief executives. The thinktank, founded in 2011 by Deborah Hargreaves, a former Guardian business editor, is to close after 15 years campaigning for fairer pay for workers.
Its interim director, Andrew Speke, said: “The substantial growth in the gap between executive and worker pay in the last year should be a wake-up call to those who’ve turned a blind eye to rising executive pay. We hope that a change in prime minister and a renewed focus on economic fairness will lead to economic inequality and corporate excess returning up the political agenda.”
Worker pay vs CEO pay
The median pay for a full-time UK worker is £39,000, according to the UK's Annual Survey of Hours and Earnings, based on estimates in October. The amount paid out to FTSE 100 executives has dropped to £857 million, from £1 billion in the previous report, while mean pay fell from £6.09 million to £5.89 million.
The High Pay Centre said this fall was the result of the exceptionally high pay award of £212 million handed out by the engineering firm Melrose Industries the previous year, as executives reaped the rewards after it bought the aerospace and automotive group GKN for £8 billion in a hostile takeover in 2018.
Top earners revealed
Sixty-six of the 94 large listed companies in the analysis increased their chief executive's pay package from the previous year. The mean long-term incentive payment (LTIP) increased by a fifth to £2.7 million, and the mean short-term incentive payment (STIP) rose 14% to £1.8 million.
Pascal Soriot, chief executive of the pharmaceutical company AstraZeneca, was the FTSE 100's highest-paid boss last year, taking home £17.7 million. Soriot has been the highest-paid head of a listed company for three of the last four years. He was displaced by the bosses of Melrose in the previous report.
GSK's Emma Walmsley is the only woman in the top 10, although she stood down as boss of the pharmaceutical company at the beginning of the year. Walmsley surged into second place thanks to a near-50% pay rise to £15.6 million in her final year in charge. CS Venkatakrishnan, chief executive of Barclays, was paid £15 million last year after EU rules limiting bonus pay were scrapped for UK banks. It was the largest package for a Barclays boss since Bob Diamond took home £17 million in 2011.
The top five earners last year were rounded out by Shell's boss, Wael Sawan, who saw his pay jump 60% to £13.7 million, despite a slump in profits, and the chief executive of Standard Chartered, Bill Winters, who received £12.7 million.
Calls for reform
The High Pay Centre argues that “excessive spending” on bosses by large listed companies comes at the expense of pay increases for the rest of the workforce. The thinktank is calling for reforms to the regulations that govern the pay-setting process companies follow, including a “fat-cat tax”, appointing two workers as board directors, and the full implementation of Labour's employment rights bill, which includes measures under which employers must inform their workers of their trade union rights.
Speke said: “As our findings show, this is the fourth year in a row that FTSE 100 executive pay has risen, and this growth is starting to substantially outstrip growth in worker pay. A failure to tackle such disproportionate and inefficient levels of inequality will only further reduce faith in our current economic model and help to accelerate the rise of rightwing populism.”
