Top chief execs ‘paid more in a year than a UK worker gets in a lifetime’

Despite a fall in remuneration during the Covid pandemic, blue chip company bosses averaged £2.7m in 2020

The annual pay of FTSE 100 chief executives fell during the pandemic but still equates to what a key worker would earn in a lifetime, according to a report that highlights the UK’s wage divide and the taxpayer support that has kept some companies afloat.

The bosses of companies in the blue-chip share index were paid £2.69m on average in 2020, the High Pay Centre said, with vaccine-maker AstraZeneca’s chief executive, Pascal Soriot, taking top spot thanks to a £15.45m deal.

The average pay figure fell by 17% compared with the £3.25m recorded in 2019 but is still 86 times the £31,000 that an ordinary British worker can expect to earn in a year.

The centre and the GMB trade union pointed to the gulf between executive rewards and ordinary wages, and raised concerns that some businesses offering bumper pay deals have relied on taxpayer backing during the pandemic.

Across the nine companies that used the furlough scheme for their employees, but have not yet said they’ll pay it back, bosses earned an average of £2.2m each. These companies include Ladbrokes owner Entain, British Airways owner IAG and Rolls-Royce.

The High Pay Centre director, Luke Hildyard, said the fact that pay packets fell between 2019 and 2020 showed that remuneration deals were working as intended, to some degree at least, falling in line with the experience of shareholders and employees.

“On the other hand, these are still very generous rewards for individuals who have already made millions of pounds over the course of their careers, at a time when, in general, government support for the economy has probably been more important to the survival and success of the UK’s biggest companies than the decisions of their executives,” he added.

“Very high CEO pay reflects a wider gap between rich and poor in the UK than in most other European countries.

“The inequalities exposed by the pandemic and the volume of public money used to protect large businesses could strengthen the argument for measures to contain top pay and rebalance extreme income differences.”

Soriot’s deal for 2020 puts him well clear at the top of the table of highly paid FTSE 100 bosses, ahead of credit rating agency Experian’s boss, Brian Cassin, on £10.3m and Albert Manifold, of building materials group CRH, on £9.9m.

Last year, the High Pay Centre said CRH exhibited the FTSE 100’s highest pay differential – the gap between the remuneration of boss and staff.

Manifold was paid more than 200 times what the median CRH worker received in a year. Manifold was paid 166 times the average salary of a CRH worker last year, and his earnings were among the highest ever awarded to an Irish corporate executive, according to the Irish Times.

The GMB union said the average FTSE 100 chief executive pay deal of £2.69m was as much as a key worker could expect to earn in their lifetime.

“The pandemic has highlighted the massive inequalities that exist in our society,” said Gary Smith, the GMB general secretary.

“If this government is serious about a levelling up agenda, ministers must make sure our NHS and local government workers get a proper pay rise – while legislating to close the obscene pay gap in the private sector.”

While yawning pay divides persist across the FTSE 100, this year’s High Pay Centre report showed that bonuses as well as basic wages fell during 2020.

Of the companies in the FTSE 100, 64% paid their chief executive an annual bonus, down from 89% in 2019, while 77% paid out share-based “long-term incentive plans” (LTIP) based on performance over the previous three to five years, compared with 82% in 2019.

The average size of a bonus fell from £1.1m to £828,000, while the average LTIP payment decreased from £2.4m to £1.38m.

But some bosses enjoyed an increase, with the largest increase awarded to Peter Jackson, chief executive of gambling giant Flutter. His pay went up more than threefold from £2.1m to £7.5m due to a payout from a share-based bonus scheme.

Female bosses were less well paid than male counterparts, earning an average of £2.63m compared with £2.8m for men. The High Pay Centre pointed out that the small sample size – there are just six female FTSE 100 bosses – meant the comparison was of limited value.

Shareholders unhappy with Soriot’s pay deal

Soriot’s pay deal, the highest in the FTSE 100, has been the subject of disgruntlement among shareholders.

He has already earned £86m during a nine-year stint at AstraZeneca that has widely been seen as successful.

But almost 40% of voting shareholders refused to support his increased deal for this year, which is worth up to £18m, potentially taking his cumulative rewards since 2012 past £100m.

The rebellion was not enough to stop the remuneration package from going ahead, meaning Soriot can expect a rich reward for a bruising year in which AstraZeneca produced the first vaccine for Covid-19 and sold it at cost price but still found itself at loggerheads with the European Union.

The 27-nation bloc has taken legal action against AstraZeneca, accusing it of failing to honour a contract to deliver vaccines, and is demanding compensation.

In July, AstraZeneca said it was hopeful of resolving the case within weeks.

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