The pay cheques of FTSE 100 company chief executives have taken a hit this year, as executive rewards were curbed during the pandemic.
The median total remuneration for CEOs at FTSE 100 firms fell nine per cent in 2021 to £2.9m, a report by PwC has found.
Meanwhile nearly a third of chief executives – twice that of last year – didn’t receive a bonus because they did not meet their target or because the bonus was cancelled altogether.
The news comes a week after the Investment Association (IA), whose members collectively manage £9.4trn, penned a letter to the remuneration committee chairs of FTSE-350 companies, urging them to exercise caution on executives’ rewards, Sky News reported.
The group also said that environmental, social and governance (ESG) risks should play a stronger role in determining renumeration packages for executives, something PwC said was increasingly being incorporated into pay policies, according to a separate study.
Earlier this month FTSE 250 home furnishings retailer Dunelm came under pressure over an “excessive” £4m pay package for its chief exec after influential shareholder advisor Pensions & Investment Research Consultants (Pirc) urged investors to vote against the firm’s pay plans at its AGM.
Almost half of the executives, at 45 per cent, also faced a salary freeze last year – though this represented a slight reduction compared to the year prior.
“We expect to see much of the same restraint and scrutiny where pay outcomes do not appropriately reflect the broader stakeholder experience or ESG expectations,” Phillippa O’Connor, reward and employment leader at PwC UK reportedly said.
“With more shareholder rebellions being recorded than in previous years, companies would do well to consider what actions they can take now to secure agreement, meet the expectations set and prepare for the new reporting regulations around their net zero plans.”
According to the report, shareholder support for renumeration packages fell in the 2021 AGM season with both the Institutional Shareholder Services (ISS) and Investment Association (IA) being more critical of pay resolutions.