The chief executives of the UK's biggest businesses have seen their pay fall by an average of almost 20 per cent over the past year, according to a preview of Deloitte's annual FTSE 100 executive remuneration report.
Median pay dropped from £4.3m in 2016 to £3.5m this year, the study shows, despite a calmer-than-expected season of annual general meetings (AGMs).
Looking at the increases in salary, the median increase remained at two per cent as it has for several years. But the number of chief executives receiving a pay rise of more than three per cent has halved since last year.
“The fall in executive pay demonstrates that remuneration committees are making a real effort to address shareholder concerns,” said Stephen Cahill, vice chairman at Deloitte.
The report indicates that 91 per cent of companies this year received more than 80 per cent of votes in support of their remuneration plans, as just one company – a rather down-at-heel Pearson – had its pay policy rejected by a majority of shareholders.
The median potential long-term incentive award for bosses also fell over the past four years, from 235 per cent of salary to 225 per cent. The drop was even more significant for chief executives of the 30 largest companies, as median potential long-term incentive awards fell from 400 per cent of salary just two years ago to 365 per cent this year.
“Alongside the decrease in incentive potential, companies are also beginning to respond to shareholder concerns about pension with over 10 per cent of companies reducing the pension provision for new executive appointments,” said Cahill.
The median annual bonus opportunity has remained steady in FTSE 100 companies since 2007, at 150 per cent of salary. But the top 30 companies are beginning to show signs of change, as their median bonus opportunity has fallen from 200 per cent to 185 per cent of salary over the past four years.
The way that incentives are being paid is also evolving. In four out of five FTSE 100 companies, any annual bonus is now paid partly in shares, a move designed to tie executives' income with the profitability of the business.