Pay for CEOs rockets 11 per cent in one year, study reveals

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The pay of company chief executives has soared by 11 per cent in the past year, with median salaries of just under £4m, a new study reveals.

The rise compares to 2 per cent for full time workers and is despite criticism from investors over excessive payments.

Unions said the figures exposed the “shocking excess” in Britain’s boardrooms.

Research by the Chartered Institute of Personnel and Development (CIPD) and the High Pay Centre among the pay packages of chief executives in FTSE 100 firms showed median pay rose by 11 per cent in the past year.

Under the “mean” measure, which is more affected by this year’s very large payouts to chief executives (CEOs) at Persimmon and Melrose Industries, pay rose by 23 per cent to £5.6m, said the report.

Women make up 7 per cent of FTSE 100 chief executives but earn 3.5 per cent of total pay, said the report.

Peter Cheese, chief executive of the CIPD, said: “Despite increased investor activism and the planned introduction of pay ratio reporting, the evidence suggests that very little is changing when it comes to top pay in the UK.

“It’s disappointing to see that CEO pay has held up in the face of increasing pressure when average pay across the workforce has barely shifted in recent years.

“Given the ongoing issues of trust in big businesses and a push for greater transparency, it really is time businesses and boards put greater scrutiny on high pay, and that they think much more objectively about what they are rewarding CEOs and how.”

Rachel Reeves, who chairs the Business, Energy and Industrial Strategy Committee, said: “Excessive executive pay undermines public trust in business. When CEOs are happily banking ever larger bonuses while average worker pay is squeezed, then something is going very wrong.

“Recent revolts on pay awards show that shareholders are increasingly sharing this frustration at unjustifiable pay awards. Executive pay must match performance.

“If boards and remuneration committee chairs are so out of touch they are prepared to waive through off-the-scale reward packages, then shareholders must strike back and hold them to account. If businesses don’t step up on executive pay, then government will need to step in.”

Luke Hildyard, director of the High Pay Centre, said: “It is deeply unsettling that such a substantial pay gap remains between CEOs and ordinary workers.

“Big CEO pay increases reflect poorly on corporate culture and accountability and suggest that bolder reforms to corporate governance may be needed. In this light, the weakening of plans to give workers representation on company boards could be misguided.”

Tim Roache, GMB general secretary, said: “These figures expose shocking excess in UK company boardrooms.

“We live in a country where company fat cats get paid 400 times more than the dedicated, hard-working carers who look after our nearest and dearest.

“Not to mention hundreds of times more than those who keep our streets clean, or ambulance workers who save lives.

“The fact that FTSE 100 CEO pay is rising five times faster than average wages is a badge of national shame.”

John McDonnell, shadow chancellor, said: “Most people’s wages are still below 2010 levels and are barely keeping up with inflation.

“So when they see the fattest cats get fatter yet again with an 11 per cent pay rise, it’s no wonder people question the fairness of our society.”

PA