Leap in salaries
Pay gap widens as executives enjoy 39% hike
Pay packets for company bosses and workers are widening, with Britain’s biggest companies awarding 39% increases to executives last year.
Median pay for a FTSE 100 chief executive rose from £2.46m in 2020 to £3.41m in 2021 and is higher than the £3.25m median recorded in 2019, the last “normal” trading year before the pandemic.
The study, by the High Pay Centre think-tank and the TUC, reveals the pay gap between executives and regular full-time employees is growing.
The median FTSE 100 chief executive is now paid 109 times the median UK full time worker. This compares to 79 times in 2020 and 107 times in 2019.
Bonuses paid to executive have also increased to £1.4m compared with £828,000 in 2020 and £1.1m in 2019. Nine in 10 bosses received a bonus.
The findings are likely to prompt renewed pressure on companies to rein in pay for top bosses at a time when many workers are facing real-term cuts to their wages as inflation soars.
However, a significant factor in the leap in chief executive pay in 2021 was the fallout from the onset of the pandemic the previous year, which encouraged a number of executives to take temporary pay cuts and led to lower or cancelled bonus payouts.
The highest paid executive last year was Sébastien de Montessus, chief executive of the London-listed African gold mining company, Endeavour Mining, which owns goldmines in Ivory Coast, Burkina Faso and Senegal, who received £16.8m – 539 times as much as a median UK full-time worker. Pascal Soriot, boss of the drug company AstraZeneca, earned £13.8m.
The biggest percentage increase in pay between 2020 and 2021 was at Harbour Energy, which was formed from the merger of Premier Oil and Chrysaor last year. It paid a combined £6.4 million in 2021 to Richard Rose, 49, its interim boss, and Linda Cook, 64, his permanent successor, up from the £814,000 paid to Tony Durrant, Premier’s previous chief, a year earlier. The package was boosted by the decision to buy out awards that Cook was forgoing from her previous job.
Excluding Harbour and Entain’s female CEOs, the median pay of the seven female CEOs was £3.01m – below the median pay of male FTSE 100 CEOs at £3.49m.
Luke Hildyard, director of the High Pay Centre, said financial rewards being paid to directors are a “big part of the cost of living crisis”.
He added: “If large employers are paying millions more to already very wealthy executives, that makes it harder to fund pay increases for low- and middle-income workers.
“If incomes in the UK were shared more evenly, that would significantly raise the living standards of the people hit hardest by the current economic crisis, while those at the top probably wouldn’t notice much difference to their lifestyles.”
The TUC general secretary Frances O’Grady added: “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.
“These unbalanced pay policies have seen the gap widen between workers and bosses this year, adding to the cost of living crisis. We need stronger 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. This approach is already commonplace in many countries and works very well. The Government should give UK workers this opportunity too.”
The report calls for companies to include a minimum of two elected workforce representatives on the remuneration committees that set pay.