Total remuneration for chief executives increased by an average of 17.6 per cent in the past year, more than five times the average rate for UK employees, according to research.
Watson Wyatt’s latest Executive Remuneration Survey found that the median total remuneration for a FTSE100 chief executive is now £1.85m a year, of which £700,000 is basic salary.
The average total remuneration increase for executive directors went up by 13.1 per cent, with a total remuneration value of £840,000.
Most of the pay increase for executives has been performance-linked – annual bonuses and long-term incentive plans – rather than hikes in basic salaries and benefits.
The fixed element of chief executives’ salaries has fallen to 51 per cent, down from 55 per cent last year.
This means the performance-related element of executive pay is now, on average, around 50 per cent of total remuneration and is on target to be up to two-thirds within five years, according to Watson Wyatt.
Damien Knight, a senior consultant at Watson Wyatt, said there was a long-term trend towards greater performance-related pay in the boardroom.
“Twenty years ago the performance-related element was about 20 per cent of an executive director’s pay, while today it accounts for around 50 per cent.
In five years’ time it could be as high as two-thirds, as it currently is in the US,” he said.