Bosses of the UK’s 100 biggest publicly listed companies have seen their pay jump by an average of 23% to almost £4m because of record bonus payments.
The average pay of chief executives of FTSE 100 companies increased from £3.2m last year to £3.9m this year, according to research by PricewaterhouseCoopers (PwC). The soaring pay at the top comes as companies push back against workers’ demands for pay rises to help them cope with high inflation and the cost of living crisis.
Luke Hildyard, the director of the High Pay Centre, a thinktank that campaigns for fairer pay for workers, said pay increases “for people who are already multimillionaires are far from ideal at a time when their lower-paid colleagues are denied a pay rise that keeps up with inflation”.
On average, CEOs received 86% of the maximum possible bonus available to them, up from 58% last year, and above “historical pre-Covid levels”. Just 5% of CEOs received no bonus in the 2021-22 financial year, down from 22% a year earlier.
PwC said the record bonuses payouts were “part driven by a post-Covid boom in some sectors, and in some cases, due to performance targets which were conservatively set in 2021 to reflect greater market uncertainty”.
Andrew Page, PwC’s executive compensation leader, said the huge payouts are likely to be met with “greater investor scrutiny” from shareholders in the forthcoming AGM season, “particularly in the context of rising inflation and pay increases across the workforce”.
“We also expect shareholders to focus on windfall gains. As most long-term incentives were granted at the onset of the pandemic, many companies will be committed to reviewing windfall gains rather than making an adjustment,” he said.
Average CEO pay is now back above pre-pandemic levels, after some companies cut executive compensation during the height of the crisis. In 2018-19, average pay was £3.6m. The proportion of CEOs with salary freezes dropped from 43% last year to 15% this year.
Neville White, the head of responsible investment policy at the sustainable investment manager EdenTree, said the return of big bonuses was “unjustifiable” in the face of the economic downturn and cost of living crisis.
“For the first year since we began consistent voting on executive pay, EdenTree has been unable to support any FTSE 100 remuneration policies or reports, opposing all those that have come before us,” he said. “At a time of increasing economic hardship, this somewhat tin-eared response by executives to their own rewards sets a particularly poor example.”
In August, research carried out for the Guardian found that the average UK CEO collects 109 times the amount paid to the average British worker, up from 79 times in 2020.
Frances O’Grady, the general secretary of the TUC, has said the growing disparity between pay at the top and that paid to workers is fuelling the cost of living crisis.
“Workers deserve a fair share of the wealth they create. But right now, CEO pay is soaring while working people experience the biggest real wage falls in 20 years,” she said. “These unbalanced pay policies have seen the gap widen between workers and bosses this year, adding to the cost of living crisis.
O’Grady called on the government to introduce tough rules to “rein in executive pay”. “This should include worker representatives on the committees that set top pay, and elected seats for workers on company boards,” she said. “This approach is already commonplace in many countries and works very well. The government should give UK workers this opportunity, too.”
