No pay rise for 36% of FTSE 100 CEOs

More than a third (36%) of FTSE 100 chief executive officers (CEOs) did not receive a salary increase in 2015, compared to 25% in 2014, according to research by PricewaterhouseCoopers (PWC).

Executive pay

Its Taking stock: review of 2015 AGM season report, based on an analysis of FTSE 100 reports for year-ends in the 12 months to 31 May 2015, found that the median pay rise for those that did receive a salary increase was 3%.

The report also found:

  • The median 3% rise in salary has brought the median base salary for CEOs up to £891,000.
  • The median bonus pay-out for 2015 represented 72% of the maximum award available, a figure that has remained unchanged since 2012.
  • Only 4% of organisations did not award a bonus.
  • At around half (48%) of organisations, bonus pay-outs were either the same as in 2014 (12%) or within 10 percentage points (36%).
  • The median annual bonus paid to FTSE CEOs in 2015 was £1.12 million, a median increase of 3% from 2014.
  • Financial outcomes represent a 67% weighting when determining the ‘average’ FTSE 100 bonus plan. Personal, non-financial and strategic target outcomes account for 14%, 10% and 9%, respectively.

Tom Gosling, executive pay partner at PWC, said: “The consistency in bonus pay-outs is raising questions about how well variable pay is living up to its name. To build trust in the system, remuneration committees must continue to improve the quality of disclosure about how bonus targets are set and whether they are sufficiently stretching. This is likely to be where shareholders’ focus will shift next.

“There’s been growing dissatisfaction with long-term incentives, which are often seen as a lottery and too complicated. In response, [organisations] are looking for performance measures that more closely link to [organisational] strategy. At the same time, they’re satisfying shareholder demands by increasing the length of time that shares must be held.”