The sums paid out to chief executives at the City’s major listed firms have bounced back to pre-pandemic levels, after jumping 30 per cent over the previous year to five year highs of £3.62m.
The pay packages mark a return to levels last seen before the pandemic and a 30 per cent increase on the £2.78m average sums paid out to the chief executives in 2020, Deloitte figures show.
The bounce back comes after 2020 saw executive pay fall for the fourth year in a row, in the face of voluntary pay cuts, a significant drop in bonuses, and increased pressure from shareholders, in the midst of Covid-19.
The return to pre-pandemic levels comes as the 2021 stock market rally last year bolstered chief executives’ bonuses, as pay packages also received a boost from the ESG incentives built into executive remuneration deals.
However, 2021 pay packages still remained markedly lower than the packages paid out to execs in 2017, when remuneration packages peaked at annual sums of £4.04m a year.
The uptick comes as generally taken a supportive stance towards executive pay increase in the 2022 AGM season, as the number of investor revolts has halved over the previous year.
Stephen Cahill, vice chairman at Deloitte, noted that the “UK has not followed countries like the US in terms of executive pay inflation in recent years,” as he suggested FTSE 100 shareholders were “supportive of pay decision in 2021.”
However, the Deloitte exec said rising living costs and an uncertain geopolitical environment, could see a “challenging” year ahead.
“Investors will rightly hold companies to account where performance does not justify pay outs or where executives are seen to be insulated from the wider employee experience,” Cahill said.
“Balancing fairness and competitiveness will play a part in the long-term success of London’s capital markets.”