FTSE 100 CEO pay flat in 2019
7 Aug 2020
Pay packages for FTSE 100 bosses remained flat this year and are likely to fall as a result of Covid-19, but CEO pay levels remain over 100 times greater than the average UK full-time worker
7 Aug 2020
The annual assessment of FTSE 100 top level remuneration carried out by the High Pay Centre and CIPD shows that median pay for chief executives fell by 0.5% between 2018 and 2019, at £3.61m compared to £3.63m.
However, this is still 119 times that of the average (median) UK full-time worker earning £30,353.
The highest paid FTSE 100 CEO received a total pay package of £58.73m, while six firms paid their CEOs more than £10m in total.
Seventy of the FTSE 100 disclosed the pay ratio between their CEO and the median pay of their UK employees. The highest quoted pay ratio was 2,605:1 and the lowest was 15:1. The median was 84:1.
The research indicated that FTSE 100 CEOs are starting to tighten their belts in response to the Covid-19 crisis and economic downturn, with 36 companies announcing cuts to executive pay.
The most common measure, taken by 14 companies, has been to cut salaries at the top by 20%. However, salaries typically only make up a small part of a FTSE 100 CEO’s total pay package.
In addition, 11 companies have cancelled short-term incentive Plans (STIPs) for their CEOs while two other firms have deferred salary increases for their CEOs.
None of the 36 companies have chosen to reduce their CEO’s long-term incentive plan (LTIP), which typically makes up half of a CEO’s total pay package.
The report argues that very high CEO pay risks undermining the spirit of solidarity that many companies are trying to project as they battle against the impact of the coronavirus.
It says the current economic uncertainty should encourage companies to consider whether the scale of pay awards reflect good business sense and the CEO’s individual contribution to the company’s success.
The relatively small cuts to pay that CEOs have made to date suggest this is not yet happening, the High Pay Centre argues.