CEO pay soars in the UK - but not for women

The chief executives of the UK’s largest companies saw their compensation jump by 23% on average between 2016 and 2017, according to a new study that highlights the widening income gap with rank-and-file workers in the country.

The mean pay for the heads of the FTSE 100 companies climbed to £5.66m (around R103m) in 2017, from £4.58m (around R85m) a year earlier, the annual analysis from the non-profit human resources organisation CIPD and the High Pay Centre think tank showed.

Those figures were exacerbated by payouts to Persimmon CEO Jeff Fairburn, whose compensation soared 22-fold to £47.1m (around R872m), and to Melrose Industries’s Simon Peckham, who raked in £42.8m (around R792m), a whopping 43 times his 2016 pay.

The figures - which include base salaries, bonuses and other incentive payouts - show that top executives are back to making about 145 times the average pay of their employees despite calls by Prime Minister Theresa May to check executive greed. Her administration plans to make publication of pay ratios mandatory and has toyed with annual binding votes by investors on remuneration reports and a ban on the award of complex share-based pay programs.

"Despite increased investor activism and the planned introduction of pay-ratio reporting, the evidence suggests that very little is changing when it comes to top pay in the UK," Peter Cheese, the chief executive of the CIPD, said in the statement.

"Pressure is building in the system," he warned.

The UK figures are still a far cry from their US counterparts. Chiefs of S&P 500 companies took home an average $20.9m (around R304m) in 2017, including salaries, bonuses and payouts of equity awards that vested or were exercised, up about 24% from the prior year, according to data compiled by Bloomberg.

Other highlights:

• The average salary for a full-time worker in the UK is £35 423 (R655 642 at current exchange rates).

• Full-time staff would need to work 160 years to earn an average CEO's pay.

• The CEOs’ median pay rose 11% to £3.93m (just under R73m) in 2017.

• Women made up 7% of the FTSE 100 CEOs but got 3.5% of their remuneration.

• The highest-paid female is GlaxoSmithKline’s Emma Walmsley, with £4.88m (around R90m).

Take-home compensation - measuring what an executive actually pockets in a year from salary, bonuses and payouts of awards from prior years - can vary drastically year over year.

Bosses get the bulk of their big payouts from equity-based incentive programs, from which payouts often come in uneven increments. They can also choose when they want to cash in certain awards, such as options.

Persimmon, which builds affordable housing in the UK, in February agreed to reduce payouts from a long-term incentive plan put into place in 2012 after it triggered public furore and led to the resignation of chairperson Nicholas Wrigley in December.

Melrose, fresh from its hostile takeover of British engineer GKN, pledged in May to review the pay packages of its top executives amid criticism from a shareholder advisory firm.

Investors will be consulted over the next few months on a new pay deal taking effect from 2020, it said at that time.

* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER
ZAR/USD
17.20
(-0.08)
ZAR/GBP
22.49
(-0.04)
ZAR/EUR
20.24
(-0.11)
ZAR/AUD
12.26
(-0.24)
ZAR/JPY
0.16
(+0.03)
Gold
2003.88
(+1.49)
Silver
25.76
(+6.40)
Platinum
937.00
(+2.01)
Brent Crude
43.86
(+1.45)
Palladium
2138.50
(+2.20)
All Share
56248.93
(+0.75)
Top 40
51951.34
(+0.74)
Financial 15
9878.55
(+0.75)
Industrial 25
74943.49
(+0.27)
Resource 10
57327.85
(+1.31)
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Do you think it was a good idea for the government to approach the IMF for a $4.3 billion loan to fight Covid-19?
Please select an option Oops! Something went wrong, please try again later.
Results
Yes. We need the money.
11% - 836 votes
It depends on how the funds are used.
74% - 5553 votes
No. We should have gotten the loan elsewhere.
15% - 1111 votes
Vote