10% pay rise? That’ll do nicely

Our annual survey of FTSE100 CEO pay packages shows no end to the rise and rise in top pay

FTSE100 CEOs continue to see overall pay packages grow at a time of restraint for others, annual High Pay Centre research shows

“There is an irrational, unhealthy and growing gap between what these companies pay their workers and what they pay their bosses” – Theresa May, July 11th 2016

Average FTSE100 CEO is now receiving £5.5 million a year

An annual survey of FTSE100 CEO pay packages released today [8.8.2016] by the High Pay Centre reveals that rewards at the top continue to grow at a double digit rate.

The average FTSE100 CEO pay package was £5.48 million in 2015, up from £4.96 million in 2014.

As the new prime minister has indicated, the growing gap between rewards for those at the top and everyone else is hard to justify at a time when economic uncertainty is intense and corporate performance mixed.

Stefan Stern, director of the High Pay Centre, said: “There is apparently no end yet in sight to the rise and rise of FTSE100 CEO pay packages. In spite of the occasional flurry from more active shareholders, boards continue to award ever larger amounts of pay to their most senior executives.

“The High Pay Centre was delighted by Theresa May’s recent intervention on this issue. There now seems to be political will and momentum behind attempts to reform top pay.

“In particular we support two of her main proposals: that companies should be obliged to publish the ratio between the pay of the CEO and the average worker in the business, and that the voice of the ordinary employee must be heard in discussions over executive pay.

“Businesses could save themselves a lot of grief, and do something to restore their reputations, if they listened to workers first before awarding these bumper pay packages.  The question the outside world keeps asking is ‘How much?!’. How much better to try and answer that question internally first with concerned yet supportive employees?”

The State of Pay: High Pay Centre briefing on executive pay

Summary findings:

• Average pay for a FTSE 100 CEO rose to £5.480 million in 2015, an increase from £4.964 million in 2014, but significantly higher than the £4.129 million in 2010
• In 2015, the average pay ratio between FTSE 100 CEOs and the average wage of their employees was 147:1. In 2014, the ratio was 148:1
• The average pay ratio between FTSE 100 CEOs and the average total pay of their employees in 2015 was 129:1
• The ratio of FTSE 100 CEO pay to the median full-time worker across the whole UK economy was 183:1 in 2014, 182:1 in 2013 and 160:1 in 2010
• In contrast to the generous pay packages awarded to their executives, only a quarter of the 100 FTSE 100 companies are accredited by the Living Wage Foundation for paying the living wage to all their UK-based staff.
• Most FTSE 100 companies fail to disclose how many people they employ in the UK in their annual reports. Only 22 companies from a sample of 72 did so.
• Directors from 39% of FTSE 100 companies were signatories to a public letter supporting Remain ahead of the Brexit vote. Of the companies which disclosed the number of UK employees, 16 out of 22 employed a majority of their employees outside the UK.
• One FTSE 100 company has employee representatives on the board. TUI, which recently merged with German incorporated TUI AG, has an airline pilot and a travel agent on its supervisory board.
• No FTSE 100 company currently publishes its CEO to employee pay ratio
• Average pay for a FTSE 100 CEO rose to £5.480 million in 2015, an increase from £4.964 million in 2014, but significantly higher than the £4.129 million in 2010
• Median FTSE 100 CEO pay in 2015 was £3.973 million, a slight increase from £3.873 million in 2014, but up from £3.391 million in 2010.
• The slower growth in median pay suggests that the increases in average pay are driven by big pay increases for a small number of CEOs at the top.
• The 10 highest paid CEOs in 2015 and 2014 were as follows:

• Big pay is a boys club. No women made it into the top ten in either of the last two years.
• 10% of FTSE 100 companies had no female executive directors and no female remuneration committee members