The median pay for chief executive officers (CEOs) working in the UK’s top 100 organisations has fallen by almost 20% to £3.5 million in 2017 compared to £4.3 million in 2016, according to research by Deloitte.
Its preview of its annual FTSE 100 executive remuneration report, which analyses publicly available data for all FTSE 100 organisations, also found that the median salary increase for CEOs working in FTSE 100 organisations remains at 2%. In addition, the number of CEOs who have received a pay increase of 3% or more has halved since 2016, excluding recent appointments that include planned salary increases to bring pay in line with market levels.
The median bonus opportunity for FTSE 100 CEOs has stayed at 150% of salary since 2007, however, in the top 30 UK organisations, the median bonus opportunity fell from 200% of salary to 185% of salary between 2014 and 2017.
Bonus pay-outs relating to performance have also decreased, from 77% in 2016 to 71% this year. The median potential long-term award for executive directors in FTSE 100 organisations fell to 225% from 235% between 2016 and 2017.
CEOs at FTSE 100 organisations in 2017 are typically expected to hold shares with a value of 2.5 times salary, and CEOs working for the top 30 UK organisations are expected to hold shares with a value of four-times salary. Despite this, half of CEOs hold shares with a value of more than 500% of salary.
Stephen Cahill (pictured), vice chairman at Deloitte, said: “The fall in executive pay demonstrates that remuneration committees are making a real effort to address shareholder concerns. This is the first cycle where the legislation introduced in 2013 and primarily voted on during the 2014 [annual general meetings] will have taken effect. It seems to show that the current legislation is working.
“We are beginning to see signs that overall pay may be falling, particularly in the largest [organisations]. Alongside the decrease in incentive potential, [organisations] are also beginning to respond to shareholder concerns about pensions, with over 10% of [organisations] reducing the pension provision for new executive appointments. Shareholder pressure to simplify remuneration arrangements also accounts for some of this change. For some [organisations], consolidating a number of different incentive plans has resulted in a decrease in the overall quantum.”