Average FTSE 100 CEO pay rises to £5.5m a year

Stefan Stern 430

Average pay for FTSE 100 chief executive officers (CEOs) increased from £4.96 million in 2014 to £5.48 million in 2015, according to research by the High Pay Centre.

Its State of pay report also found that the median pay for FTSE 100 CEOs was £3.97 million in 2015, compared to £3.87 million in 2014 and £3.391 million in 2010.

The average pay ratio between FTSE 100 CEOs and the average wage of their employees was 140:1 in 2015, compared to 148:1 in 2014. The pay ratio between FTSE 100 CEOs and the average total pay of employees was 129:1 last year.

The top 10 highest-paid CEOs in 2015 were from WPP, Berkeley Group, Reckitt Benckiser, Sky, Shire, BP, Relx, Prudential Financial, Schroders and Lloyds Group. All of the CEOs in the top 10 are male.

Stefan Stern (pictured), director of the High Pay Centre, said: “There is apparently no end yet in sight to the rise and rise of FTSE 100 CEO pay packages. In spite of the occasional flurry from more active shareholders, boards continue to award ever larger amounts of pay to their most senior executives.

“The High Pay Centre was delighted by Theresa May’s recent intervention on this issue. There now seems to be political will and momentum behind attempts to reform top pay.

“In particular we support two of her main proposals: that [organisations] should be obliged to publish the ratio between the pay of the CEO and the average worker in the business, and that the voice of the ordinary employee must be heard in discussions over executive pay.”

Peter Cheese, chief executive at the Chartered Institute for Personnel and Development (CIPD), added: “There is still a shocking disconnect between pay for those at the top and the rest of the workforce in large [organisations]. Worse still, this gap is continuing to grow despite our latest data showing that it leads to a real sense of unfairness that has a clear impact on employee motivation.

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“The message from employees is clear: ‘the more you take, the less we’ll give’. This kind of culture in the workplace is bad for both employers and employees. Furthermore, when pay for those at the top is not linked to either personal performance or business outcomes, it undermines trust in business, not just from employees but from customers and other stakeholders.

“That is why the CIPD support[s] Theresa May’s call for action to be taken on executive pay. A simple first step to tackle this would be to require publicly-listed companies to publish pay ratios between the CEO and full-time employees. This will serve to encourage accountability and force a greater focus on senior pay among key stakeholder groups, such as investors who can help to drive change and hold businesses and senior individuals to account.”