New research has found that the pay of the chief executives of the UK’s largest companies increased by 2.2% in 2023.
According to the study by the High Pay Centre, median pay for a FTSE 100 CEO increased from £4.1 million in 2022 to £4.19 million in 2022. This is the highest level of FTSE 100 CEO pay on record, although the growth in CEO pay levels are slower than in the past two years, when there was a post-pandemic bounce.
The median FTSE 100 CEO is now paid 120 times more than the median UK full-time worker. This ratio peaked at 124:1 in 2022 but is still a much larger ratio than the 108:1 that was calculated in 2021.
Among other eye-catching findings from the research was that mean FTSE 100 CEO pay grew from £4.42 million to £4.98 million – a 12.2% and an increase of more than £500,000. Additionally, the number of FTSE 100 companies awarding eight-figure pay packages of over £10 million more than doubled, from four firms in 2022 to nine in 2023.
And among FTSE 100 firms £755 million was spent on the pay of just 222 executives.
A large majority (81%) of FTSE 100 companies paid their CEO a long-term incentive payment (LTIP), an increase on the 74% who did in 2022. The mean LTIP payment increased from £1,791,000 in 2022 to £2,058,000 in 2023.
Twelve female CEOs served for at least part of the year, with eight of those remaining at the end of the financial year. Just six companies had female leadership for the entire financial year, with their median pay amounting to £2.69 million. This was far lower than the median pay of male FTSE 100 CEOs at £4.19m.
The High Pay Centre report put forward the view that excessive spending on top earners by leading firms made it harder to fund pay increases for the wider UK workforce.
The think tank is calling for reforms such as requirements for companies to include a minimum of two elected workforce representatives on the remuneration committees that set pay. It also argues for requirements for companies to provide more detailed disclosure of pay for top earners beyond the executives, and low earners including indirectly employed workers, enabling more informed pay negotiations at individual companies and a clearer debate about pay inequality more generally.
High Pay Centre director Luke Hildyard said the figures reflected a “small number of companies making really large pay awards rather than big increases across the board”.
He noted that higher executive pay had been a key demand of business lobbyists in recent years, with the latest figures indicating that “this campaign has had some success, with shareholders at the biggest UK companies becoming more willing to wave through bigger pay-outs”.
The huge pay gap between executives and the wider UK workforce, said Hildyard, was the result of factors such as the decline of trade union membership, low levels of worker participation in business decision-making and a business culture that puts the interests of investors before workers, customers, suppliers and other stakeholders.
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