Personnel Today
  • Home
    • All PT content
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Learning & training
    • Pay & benefits
    • Wellbeing
    • Recruitment & retention
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Maternity & paternity
    • Shared parental leave
    • Redundancy
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • Brightmine
    • Learn more
    • Products
    • Free trial
    • Request a quote
  • Webinars
  • Advertise
  • OHW+

Personnel Today

Register
Log in
Personnel Today
  • Home
    • All PT content
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Learning & training
    • Pay & benefits
    • Wellbeing
    • Recruitment & retention
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Maternity & paternity
    • Shared parental leave
    • Redundancy
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • Brightmine
    • Learn more
    • Products
    • Free trial
    • Request a quote
  • Webinars
  • Advertise
  • OHW+

Latest NewsESGExecutive payInflation

Executive pay back to normal but challenges lie ahead

by Rob Moss 4 Oct 2022
by Rob Moss 4 Oct 2022 Peshkova / Shutterstock
Peshkova / Shutterstock

Executive pay in FTSE 350 listed companies has returned back to near pre-pandemic levels, but investor activism and inflationary pressures suggest a tough year ahead for remuneration committees.

That’s according to research from Mercer which revealed that the Covid pandemic had a “significant impact” on salaries and long-term incentives for senior executives.

Nic Stratford, executive reward partner at Mercer, said: “The pandemic had a significant impact on executive director remuneration, with many directors taking voluntary salary reductions during the worst period of the pandemic and in many cases, their 2021 bonus and long-term incentives did not pay out.

“As company performances improved into 2021, most salary reductions were unwound and bonus levels rebounded. Our analysis shows that bonus pay-outs made at 85% of the maximum possible in FTSE 100 companies, are actually higher than they were pre-pandemic.”

He explained that when many companies set targets in early 2021, the success of the UK’s Covid vaccination programme and the impact of new variants could not be confidently predicted.  As such, he said many financial targets “may have been conservative, in hindsight”.

Executive pay

Reporting requirements to be removed for thousands of employers

Legal guidance: Executive pay ratio reporting

FTSE 100 chief executive pay jumps by 39%

Mercer’s analysis, which used data for financial year-ends up to the end of March, also showed that investor activism in relation to executive pay and reward is on the rise with ESG targets in incentives becoming more common.

Around two-thirds of FTSE 100 executives now have ESG targets in their annual bonus and around half have them in their long-term incentive plans, said Mercer.

Shareholders continue to pay close attention to pay decisions. Companies perceived to have treated executives more favourably than employees, or viewed to have ignored the wider context and experience of shareholders, have faced public censure and low AGM votes.

“The average percentage of votes in favour of FTSE 100 executive remuneration policies at AGMs increased from 86% in 2021 to 88% in 2022,” said Stratford. “In the FTSE 250 the average increased from 88% to 93%. This does not necessarily mean that investor sentiment has become more positive though.

“It is more likely to be an indicator that shareholders have won the recent big battles to force companies to make changes to their remuneration policies and that having made those changes, the remuneration policies being put to investor votes now generally satisfy investor red lines.”

He said that only three years ago, most companies paid their executives significantly higher pension contributions than were available to employees. Investors’ demands for more alignment has led to 98% of companies now offering new executive directors pensions at the same level as their workforce.

“A similar percentage of companies have either already aligned existing directors’ pensions or have committed to do so by the end of 2022,” he said. “As a result of these changes, there is now only a 2% point difference in median pension levels for executive directors compared to the workforce average and this will have been almost completely eliminated by 2023.”

Stratford signalled that 2023 would be a busy year for companies and their investors, with the majority of FTSE companies required to hold their next vote on remuneration policies in 2023.

He also stressed that inflation would pose a challenge for remuneration committees over the next 18 months. “As inflation rises, the budgets for 2023 employee salary increases are also likely to rise,” said Stratford. “Whilst employee salary increases were running at around 2.5% to 3.0%, investors have been relaxed if executive directors receive salary increases at the same level.

Sign up to our weekly round-up of HR news and guidance

Receive the Personnel Today Direct e-newsletter every Wednesday

OptOut
This field is for validation purposes and should be left unchanged.

“If salary increase budgets reach 5.0% to 6.0%, or even more in 2023, it is not clear that investors will be just as relaxed for executive director salary increases to be at the same level as the workforce.”

Compensation and benefits opportunities on Personnel Today


Browse more compensation and benefits jobs

Rob Moss

Rob Moss is a business journalist with more than 25 years' experience. He has been editor of Personnel Today since 2010. He joined the publication in 2006 as online editor of the award-winning website. Rob specialises in labour market economics, gender diversity and family-friendly working. He has hosted hundreds of webinar and podcasts. Before writing about HR and employment he ran news and feature desks on publications serving the global optical and eyewear market, the UK electrical industry, and energy markets in Asia and the Middle East.

previous post
Nine in 10 want their employer to offer mental health support
next post
Employers urged to be more inclusive of candidates with gaps on CV

You may also like

Legislation could block bonuses at Thames Water

16 May 2025

Lloyds scales back diversity targets for employee bonuses

11 Mar 2025

Barclays and NatWest remove climate targets from bonus...

18 Feb 2025

Barclays doubles CEO pay and awards shares to...

13 Feb 2025

CEO’s 2025 pay overtook average salary on 6...

6 Jan 2025

Executive pay plans in Europe increasingly linked to...

16 Dec 2024

UK workers support caps on executive pay

25 Nov 2024

How inclusive pay practices can support diverse talent

20 Nov 2024

FTSE 100 gender pay gap remains stubbornly high

18 Nov 2024

Nissan slashes 9,000 jobs globally and halves CEO’s...

7 Nov 2024

  • 2025 Employee Communications Report PROMOTED | HR and leadership...Read more
  • The Majority of Employees Have Their Eyes on Their Next Move PROMOTED | A staggering 65%...Read more
  • Prioritising performance management: Strategies for success (webinar) WEBINAR | In today’s fast-paced...Read more
  • Self-Leadership: The Key to Successful Organisations PROMOTED | Eletive is helping businesses...Read more
  • Retaining Female Talent: Four Ways to Reduce Workplace Drop Out PROMOTED | International Women’s Day...Read more

Personnel Today Jobs
 

Search Jobs

PERSONNEL TODAY

About us
Contact us
Browse all HR topics
Email newsletters
Content feeds
Cookies policy
Privacy policy
Terms and conditions

JOBS

Personnel Today Jobs
Post a job
Why advertise with us?

EVENTS & PRODUCTS

The Personnel Today Awards
The RAD Awards
Employee Benefits
Forum for Expatriate Management
OHW+
Whatmedia

ADVERTISING & PR

Advertising opportunities
Features list 2025

  • Facebook
  • Twitter
  • Instagram
  • Linkedin


© 2011 - 2025 DVV Media International Ltd

Personnel Today
  • Home
    • All PT content
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Learning & training
    • Pay & benefits
    • Wellbeing
    • Recruitment & retention
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Maternity & paternity
    • Shared parental leave
    • Redundancy
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • Brightmine
    • Learn more
    • Products
    • Free trial
    • Request a quote
  • Webinars
  • Advertise
  • OHW+