Figures published today by the CIPD and High Pay Centre show rewards for the top brass at blue-chip companies dropped by almost a fifth in last year, but still remain extraordinarily high.
The CIPD/HPC found FTSE 100 CEOs earned an average £4.5m a year in 2016, down 17% from £5.4m in 2015. They said this drop was driven by political pressure, public disapproval and campaigning.
However, the report’s authors said while the reduction is positive, a huge gap still remains between the top level and the rest of the workforce.
The report found in 2016 the pay ratio between FTSE 100 CEOs and the average pay package of their employees was 129:1. That means for every £1 the average employee is paid, their CEO receives £129. In 2015, the ratio was 148:1.
The report also highlighted the fact that there are just six female CEOs in the FTSE 100. It said while women make up 6% of the FTSE 100, they earn just 4% of the total pay.
Male CEOs in the index earned on average £4.7m last year, compared with £2.6m for women according to the report.
Sacha Sadan, director of corporate governance at Legal & General Investment Management (LGIM), described the report as a “positive and constructive step into simplifying the issue of executive pay within the FTSE 100”.
He added last year in the UK, LGIM voted against 118 remuneration resolutions and against 18 named directors due to pay concerns.
“We are encouraged by the progress being made and will continue to push companies to address pay inequality between CEOs and employees in order to achieve pay structures that are aligned with all stakeholders.”
The Investment Association (IA) welcomed the findings, saying they represent a welcome step in restoring public confidence in executive pay – and show that FTSE 100 companies are listening to shareholders.
An IA spokesperson said: “Executive pay must be aligned with the long-term interests and strategy of the business, with senior executives being rewarded for successful performance over the longer term.
“As such, we have called for simpler pay structures and the publication of pay ratios, so that companies clearly justify why their pay structures and overall levels of pay are appropriate to their business.”
