High Pay Centre finds that UK chief executives continued to enjoy pay and benefit rises, with average FTSE 100 boss receiving a £5.6m overall package
Stefan Stern, director of the High Pay Centre, said the figure was based on a ‘single figure’ calculation that includes salary, bonus, long term incentives and pension. Photograph: Andy Rain/EPA
Angela Monaghan
Wednesday 13 April 2016 00.01 BSTLast modified on Wednesday 13 April 201600.58 BST
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Britain’s top bosses have continued to enjoy generous pay rises despite greater scrutiny of executive rewards, according to the latest data from the High Pay Centre.
FTSE 100 companies that have reported pay deals so far this year have given their chief executives an aggregate 6% rise, figures from the thinktank showed. The average package was worth £5.6m.
The calculation was based on the so-called “single figure” pay disclosure of 62 top flight companies that have published their pay reports for the 2015 financial year. The figure includes salary, bonus, long term incentives and pensions.
Stefan Stern, director of the High Pay Centre, said: “The evidence, which is coming directly from companies’ own annual reports, is that the 20-year rising trend in top company pay continues unabated.
“The UK’s new disclosure rules now allow investors to observe this as it happens, but the latent power possessed by investors to call a halt to these excessive rewards remains largely unexercised.”
Since 2013 shareholders have had the power to reject company pay plans.
However, in a separate report that focused on salary alone, consultants PricewaterhouseCoopers (PwC) suggested the UK’s top companies were showing “restraint” when awarding increases to bosses.
In an analysis of pay reports from 47 FTSE 100 companies for 2016, the accountancy firm found that chief executives and chief financial officers received a median salary increase of 2%.
When stripping out the 42% of chief executives whose pay was frozen, median salaries increased by 3%, with a median base salary for chief executives of £941,000, according to PwC.
Fiona Camenzuli, reward and employment partner at PwC, said that while salaries were frozen for only a minority of bosses, it was a high proportion compared with the longer term trend.
She said: “Remuneration committees are continuing to make tougher judgments on pay outcomes and coupled with greater scrutiny of performance targets, requirements to hold shares for longer and malus and clawback provisions, mean executive pay is now harder to earn than in the past.
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“Shareholders expect total payouts for the year to be a fair reflection of overall performance and greater transparency. The improvement in the quality of bonus target disclosure has been a triumph of collective shareholder action – the result is a definitive move to a market norm of full retrospective target disclosure to enable investors to assess the toughness of targets.”
The High Pay Centre said however that the idea the UK’s top companies were showing restraint in top executives’ pay levels was “troubling”.
Camenzuli accepted that in the context of the general public, executive pay was still high.
“This whole concept of fairness is at the centre of boardroom debate. It’s a very live issue,” she said.
PwC added in its report: “With inequality being the issue du jour, we shouldn’t expect the attention to move away from executive pay anytime soon.”
The average UK worker suffered from six years of falling wages in real terms from 2008 as inflation outpaced pay growth.
Pay growth has since picked up, but is still below pre-crisis levels and has remained sluggish despite other signs of improvement in the UK jobs market, where employment is at a record high of 31.4 million.
In the latest available official data, average weekly earnings for employees rose 2.1% in the three months to January compared with a year earlier.
The TUC has warned that a full recovery in the value of wages is still years away, with average weekly earnings still worth £40 a week less than before the financial crash.
It comes as companies face the prospect of shareholder anger over executive pay at their annual meetings over the next two months.
A group representing individual shareholders has advised BP investors to vote against chief exexcutive Bob Dudley’s $20m (£14m) pay. ShareSoc said Dudley’s pay was too high for a company that suffered a record loss last year.
Housebuilder Persimmon is also facing a potential shareholder revolt over executive pay at its annual meeting on Thursday.
PwC is planning to publish its full executive pay survey of FTSE 100 companies in June, giving a more comprehensive picture.
Stefan Stern, director of the High Pay Centre, said the figure was based on a ‘single figure’ calculation that includes salary, bonus, long term incentives and pension. Photograph: Andy Rain/EPAAngela Monaghan
Wednesday 13 April 2016 00.01 BSTLast modified on Wednesday 13 April 201600.58 BST
Share on Pinterest
Share on LinkedIn
Share on Google+
Comments124
Save for later
Britain’s top bosses have continued to enjoy generous pay rises despite greater scrutiny of executive rewards, according to the latest data from the High Pay Centre.
FTSE 100 companies that have reported pay deals so far this year have given their chief executives an aggregate 6% rise, figures from the thinktank showed. The average package was worth £5.6m.
The calculation was based on the so-called “single figure” pay disclosure of 62 top flight companies that have published their pay reports for the 2015 financial year. The figure includes salary, bonus, long term incentives and pensions.
Stefan Stern, director of the High Pay Centre, said: “The evidence, which is coming directly from companies’ own annual reports, is that the 20-year rising trend in top company pay continues unabated.
“The UK’s new disclosure rules now allow investors to observe this as it happens, but the latent power possessed by investors to call a halt to these excessive rewards remains largely unexercised.”
Since 2013 shareholders have had the power to reject company pay plans.
However, in a separate report that focused on salary alone, consultants PricewaterhouseCoopers (PwC) suggested the UK’s top companies were showing “restraint” when awarding increases to bosses.
In an analysis of pay reports from 47 FTSE 100 companies for 2016, the accountancy firm found that chief executives and chief financial officers received a median salary increase of 2%.
When stripping out the 42% of chief executives whose pay was frozen, median salaries increased by 3%, with a median base salary for chief executives of £941,000, according to PwC.
Fiona Camenzuli, reward and employment partner at PwC, said that while salaries were frozen for only a minority of bosses, it was a high proportion compared with the longer term trend.
She said: “Remuneration committees are continuing to make tougher judgments on pay outcomes and coupled with greater scrutiny of performance targets, requirements to hold shares for longer and malus and clawback provisions, mean executive pay is now harder to earn than in the past.
Advertisement
“Shareholders expect total payouts for the year to be a fair reflection of overall performance and greater transparency. The improvement in the quality of bonus target disclosure has been a triumph of collective shareholder action – the result is a definitive move to a market norm of full retrospective target disclosure to enable investors to assess the toughness of targets.”
The High Pay Centre said however that the idea the UK’s top companies were showing restraint in top executives’ pay levels was “troubling”.
Camenzuli accepted that in the context of the general public, executive pay was still high.
“This whole concept of fairness is at the centre of boardroom debate. It’s a very live issue,” she said.
PwC added in its report: “With inequality being the issue du jour, we shouldn’t expect the attention to move away from executive pay anytime soon.”
The average UK worker suffered from six years of falling wages in real terms from 2008 as inflation outpaced pay growth.
Pay growth has since picked up, but is still below pre-crisis levels and has remained sluggish despite other signs of improvement in the UK jobs market, where employment is at a record high of 31.4 million.
In the latest available official data, average weekly earnings for employees rose 2.1% in the three months to January compared with a year earlier.
The TUC has warned that a full recovery in the value of wages is still years away, with average weekly earnings still worth £40 a week less than before the financial crash.
It comes as companies face the prospect of shareholder anger over executive pay at their annual meetings over the next two months.
A group representing individual shareholders has advised BP investors to vote against chief exexcutive Bob Dudley’s $20m (£14m) pay. ShareSoc said Dudley’s pay was too high for a company that suffered a record loss last year.
Housebuilder Persimmon is also facing a potential shareholder revolt over executive pay at its annual meeting on Thursday.
PwC is planning to publish its full executive pay survey of FTSE 100 companies in June, giving a more comprehensive picture.
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