The pay of FTSE 100 bosses fell by nearly a fifth last year on the back of growing investor pressure for restraint.
New figures out today show that the average chief executive on the blue-chip index earned total remuneration of £4.5m last year, down 17 per cent from £5.4m in 2015.
The latest FTSE 100 pay report from CIPD, the HR professional body, and campaigners at the High Pay Centre also revealed a reduction in pay ratios between chief execs and average employees, from 148:1 to 129:1.
WPP boss Sir Martin Sorrell remained the best paid boss on the FTSE 100, despite his overall remuneration falling from £70.4m in 2015 to £48.1m last year. Behind him was Carnival’s Arnold Donald on £22.4m, Reckitt Benckiser’s Rakesh Kapoor on £14.6m and AstraZeneca’s Pascal Soriot on £13.4m.
|Chief executive||Company||2016 pay|
|Sir Martin Sorrell||WPP||£48,148,000|
|Rakesh Kapoor||Reckitt Benckiser Group plc||£14,609,000|
|Pascal Soriot||AstraZeneca plc||£13,389,000|
|Bob Dudley||BP plc||£8,399,000|
|Albert Manifold||CRH plc||£8,045,000|
|Nicandro Durante||British American Tobacco||£7,630,000|
|Flemming Ornskov||Shire plc||£7,504,000|
|Ben Van Beurden||Royal Dutch Shell plc||£6,925,000|
The overall reduction in pay was welcomed by asset management industry body the Investment Association. “The fall in CEO pay packages shows that FTSE 100 companies are listening to the demands of their shareholders and this is a welcome step in restoring public confidence in executive pay,” a spokesperson said.
Theresa May’s government, which placed executive pay in the spotlight at the end of last year with a corporate governance green paper, said it welcomed the headline reduction in pay. Business minister Margot James said: “This report shows encouraging signs that the UK’s largest firms are already making progress in this area and our responsible business reforms, which we will publish shortly, will help to enhance the public’s trust and confidence in big business.”
Roger Barker from the IoD described the drop in pay as a “positive development”. He told City A.M.: “I think the public mood since the financial crisis, pressure from shareholders and pressure from government are all playing a part in making boards more cautious about their pay policies.”
But the report identified a large gap between male and female chief executive pay. Six female FTSE 100 bosses earned an average of £2.6m, compared with a male average of £4.7m.
During this year’s AGM season, average shareholder approval for remuneration actually increased, from 91.5 per cent to 92.9 per cent, according to figures from Proxy Insight.
Managing director Nick Dawson noted that many companies were under increased pressure this year because they were holding binding votes on remuneration policy, which come around once every three years.
Dawson told City A.M.: “I think the combination of binding policy votes coupled with much more aggressive signals from both investors and the media at large drove many companies to be ultra-cautious in the pay plans put forward to shareholders.”