Research released by a think tank the High Pay Centre revealed that, despite calls from British workers for higher wages, the CEOs of the largest companies in the European country received record compensation in 2023, with nine companies offering them packages worth over 10 million pounds (USD 12.75 million).
The research reported that the median pay for a CEO of a FTSE-100 company increased 2.2% to 4.19 million pounds in 2023, though it added that CEO pay growth had slowed compared with the previous two years.
The study found that the median salary of a full-time British worker was 120 times lower than that of a FTSE-100 CEO. Among the British workers to go on strike in 2024 over wages or working conditions are train drivers and family physicians.
“The increase in average CEO pay reflects a small number of companies making really large pay awards rather than big increases across the board,” Luke Hildyard, director of the High Pay Centre said.
“A business culture that puts the interests of investors before workers, customers, suppliers and other stakeholders,” Hildyard continued.
In recent years, shareholder anger over executive compensation at Britain’s top companies has been particularly focused on the disparity between average worker earnings and CEO pay.
In order to prevent top talent from leaving for nations where pay is less of a contentious issue, some fund managers in the United Kingdom are supporting proposals to give boards more leeway when it comes to compensating them.
Pascal Soriot of AstraZeneca, a pharmaceutical company, was the highest-paid British CEO, taking home 16.85 million pounds, according to the High Pay Centre.
Using company financial disclosures, the research revealed that Erik Engstrom of information and analytics group RELX came in second with 13.64 million pounds. And the third highest-paying CEO is Albert Manifold of CRH with 11.68 million pounds.
The increase in average pay for CEOs was mainly influenced by a small group of companies who significantly raised rewards, rather than large increases from a range of companies, according to the High Pay Centre.
Of the 54 companies which paid their CEO more in 2023, the three largest percentage increases were at Rolls-Royce (an increase of 255%), Reckitt (192%) and Haleon (151%).
“While it’s much too early to describe this as a trend, it is interesting that a small number of large companies made very large CEO pay awards this year, given the recent debate about executive pay,” said the High Pay Centre.
In order to recruit and retain world-class talent, influential industrial voices have been arguing that British firms need to raise CEO pay. On the other hand, the Centre for Pay notes that “the number of United Kingdom-headquartered companies that could be considered globally significant is low”.
Barely a third of FTSE 100 companies would be large enough to qualify for the US’ S&P 500 index. Some even argue that pay levels should therefore reflect this disparity.
According to data released by the United States Labour Union Federation AFL-CIO earlier in August 2024, S&P 500 CEOs made USD 16.7 million (15.30 million euro) on average in 2022. The Centre for High Pay also outlined practical issues surrounding very high rewards for CEOs, notably that: “Excessive spending on top earners … makes it harder to fund pay increases for the wider UK workforce.”
Pascal Soriot’s salary, meanwhile, is 482 times the pay of the median British full-time worker. In order to manage these disparities, the Centre for High Pay has published a list of recommendations for the Keir Starmer government. One suggestion has been to improve pay transparency, ensuring that private and public companies publish the salaries of their highest earners.
“The think tank also noted that workers should have easily accessible information about their relative position on pay, meaning that they know how their salary relates to the earnings of colleagues performing similar roles,” reported EuroNews.