Bonus bonanza boosts FTSE 100 chief executives’ pay by practically 1 / 4

FTSE 100 chief executives’ pay soared by a mean of 23 per cent this yr, in accordance with analysis from PwC that comes throughout tense negotiations with rank-and-file employees.

The rise to £3.9mn was pushed by report bonus pay-outs, partly the impact of decrease targets set in the course of the pandemic. The brand new information is revealed as corporations wrestle to steer employees to simply accept below-inflation pay will increase.

Many corporations bounced again strongly as Covid-19 lockdowns ended, resulting in a mean CEO bonus of 86 per cent of the utmost accessible, up from 58 per cent final yr and towards a long run common of 70 to 75 per cent, in accordance with PwC.

The upper bonuses took total common pay up from pre-pandemic ranges of £3.6mn in 2018-19 and £3.7mn for 2017-18. 

PwC stated that 2023 pay awards had been prone to be topic to “unprecedented” shareholder scrutiny as corporations face a tougher 12 months and the UK dangers getting into a recession.

Many employees had been fighting spiralling inflation and rising rates of interest, whereas corporations had been usually providing below-inflation pay will increase of round 5 to six per cent, in accordance with PwC.

Andrew Web page, govt compensation chief at PwC UK, stated the “enhance in govt pay and bonuses highlights that FTSE 100 corporations had been boosted by companies opening up and demand returning after the pandemic”.

However he added that “greater pay outcomes are prone to be met with higher investor scrutiny [in the 2023 AGM season], significantly within the context of rising inflation and pay will increase throughout the workforce”.

PwC stated that the place corporations have skilled vital share worth will increase since their 2020 long-term incentive was granted, shareholders would anticipate remuneration committees to find out whether or not there was a “windfall” acquire and justify choices for the vesting stage of those awards.

Though pay awards had been set earlier than the present value of dwelling disaster and included corporations reporting annual outcomes from September final yr, the massive salaries taken by the UK’s high executives have sparked criticism amongst honest pay campaigners.

Luke Hildyard, director of the Excessive Pay Centre think-tank, stated that such pay will increase “for people who find themselves already multimillionaires are removed from excellent at a time when their lower-paid colleagues are denied a pay rise that retains up with inflation”.

The vast majority of executives acquired a wage enhance for 2022 in keeping with their workforce, with 38 per cent being awarded a rise under that of their employees. Nevertheless, using bonuses and long-term incentive plans considerably boosted total payouts.

Pay for chief executives had fallen within the pandemic, reflecting decrease bonuses and strikes by many CEOs to freeze their pay, with the common pay of CEOs totalling £3.2mn in 2020-21 and £3.1mn in 2019-20.

However this has since risen once more. The proportion of chief executives with wage freezes fell from 43 per cent in 2021 to fifteen per cent in 2022, whereas solely 5 per cent of FTSE 100 CEOs acquired no bonus for 2021-22, down from 22 per cent in 2020-21. 

Up to now, buyers have been broadly supportive of administration remuneration; shareholders lodged an total common of 95 per cent of votes in favour of remuneration reviews this yr.

However some corporations have already confronted revolts. In June, Informa suffered a shareholder rise up towards a £2.7mn pay package deal for chief govt Lord Stephen Carter.

Different corporations which have had revolts embrace Morgan Sindall after its chief govt John Morgan’s wage rose by about 150 per cent in contrast with 2020 and Marks and Spencer over its payout to departing CEO Steve Rowe.

PwC evaluation additionally confirmed that nearly 90 per cent of FTSE 100 corporations included environmental, social and governance (ESG) measures as a part of the variable incentive preparations.

Social measures in annual bonus plans proceed to be the most typical type of ESG metric at 54 per cent, pushed by range and inclusion, well being and security and worker engagement. There has additionally been a higher adoption of environmental metrics, corresponding to discount in emissions, up from 40 per cent in 2021 to 49 per cent in 2022.