The average total pay for FTSE 100 CEOs rose to a record £3.9m in 2021-22 as record bonuses were paid out.
Research by PwC revealed a 23% increase from the 2018-19 figure of £3.6m with CEOs receiving 86% of the maximum possible bonus available to them. This was up from 58% the previous year, and above “historical pre-Covid levels”.
A small proportion of CEOs (5%) received no bonus in the 2021-22 financial year, compared with 22% a year earlier.
PwC executive compensation leader Andrew Page said the size of the payouts meant it was likely they would be met with greater investor scrutiny from shareholders in the forthcoming AGM season, given the wider context of rising inflation, a squeeze on pay increases for most workers, industrial action and cuts in public spending.
The main reason for the bonuses was the business bounce back as the Covid crisis receded, leading to an average CEO bonus of 86% of the maximum available against a long term average of 70 to 75%. Page added that the bonus boom was partly down to performance targets being conservatively set in 2021 to reflect greater market uncertainty.
The analysis found that average CEO pay was now above pre-pandemic levels, after some companies cut executive compensation during the height of the crisis. The proportion of CEOs with salary freezes dropped from 43% last year to 15% this year.
Page added: “We also expect shareholders to focus on windfall gains. As most long-term incentives were granted at the onset of the pandemic, many companies will be committed to reviewing windfall gains rather than making an adjustment.”
Director of fair pay think tank High Pay Centre, Luke Hildyard, said salary increases “for people who are already multimillionaires are far from ideal at a time when their lower-paid colleagues are denied a pay rise that keeps up with inflation”.
The head of responsible investment policy at sustainable investment manager EdenTree, Neville White, told The Guardian the bonuses were unjustifiable and “tin-eared”.
“At a time of increasing economic hardship, this somewhat tin-eared response by executives to their own rewards sets a particularly poor example,” he said.
TUC general secretary Frances O’Grady called on the government to rein in executive pay. Measures should include worker representatives on the committees that set top people’s pay, and elected seats for workers on company boards.
She said: “These unbalanced pay policies have seen the gap widen between workers and bosses this year, adding to the cost of living crisis.”