Bonusbonanza increases salaries of FTSE 100 bosses by almost a quarter

The salaries of FTSE 100 chiefs have risen by an average of 23 per cent this year, according to research by PwC, conducted amid tense negotiations with humble employees.

The increase to £3.9m was due to record bonus payouts, partly due to the impact of lower targets set during the pandemic. The new data comes as companies struggle to persuade their employees to accept wage increases below the rate of inflation.

Many companies rebounded strongly when Covid-19 lockdowns ended, resulting in an average CEO bonus of 86 percent of the maximum available, according to PwC, up from 58 percent last year and from a long-term average of 70 to 75 percent.

The higher bonuses resulted in average total pay of £3.6m pre-pandemic in 2018-19 and £3.7m for 2017-18.

PwC said 2023 payrolls are likely to face an “unprecedented” shareholder scrutiny as companies face a tougher 12 months and the UK risks slipping into recession.

Many workers struggled with rising inflation and rising interest rates, while companies typically offered raises about 5 to 6 percent below inflation, according to PwC.

Andrew Page, Executive Compensation Leader at PwC UK, said the “increase in executive salaries and bonuses shows FTSE 100 companies have been boosted by the opening up of businesses and calls for them to return in the wake of the pandemic”.

But he added that “higher salary results will likely come with greater scrutiny from investors.” [in the 2023 AGM season]particularly in the context of rising inflation and wage increases across the workforce”.

PwC said that in cases where companies have seen significant share price appreciation since granting their long-term incentive in 2020, shareholders would expect compensation committees to determine whether there has been a “windfall” gain and make decisions about vesting levels justify these allocations.

Despite wage premiums being set before the current cost-of-living crisis and companies reporting annual results as late as September last year, the huge salaries of Britain’s top executives have drawn criticism from fair pay campaigners.

Luke Hildyard, director of think-tank High Pay Center, said such raises “are far from ideal for people who are already multi-millionaires, at a time when their lower-paid peers are being denied a raise that’s consistent with the… inflation keeps pace”.

The majority of executives received a pay rise in line with their workforce for 2022, with 38 percent receiving a pay rise less than that of their workforce. However, the use of bonuses and long-term incentive plans has significantly increased overall payouts.

CEO salaries had fallen during the pandemic, driven by lower bonuses and moves by many CEOs to freeze their salaries, with the average CEO salary totaling £3.2m in 2020-21 and £3.1m in 2019-20. GBP fraud.

In the meantime, however, this has increased again. The proportion of chief executives with pay freezes fell from 43 percent in 2021 to 15 percent in 2022, while just 5 percent of FTSE 100 CEOs received no bonus for 2021-22, down from 22 percent in 2020-21.

So far, investors have been broadly supportive of management pay; the shareholders cast an average of 95 percent of the votes in favor of the compensation reports this year.

But some companies are already struggling with revolts. In June, Informa suffered a shareholder rebellion over a £2.7million pay package for chief executive Lord Stephen Carter.

Other companies that have had revolts include Morgan Sindall after its CEO John Morgan’s salary rose about 150 percent compared to 2020, and Marks and Spencer over its payout to outgoing CEO Steve Rowe.

PwC analysis also showed that nearly 90 percent of FTSE 100 companies have incorporated environmental, social and governance (ESG) measures into their variable incentive arrangements.

Social measures in annual bonus plans remain the most common form of ESG metric at 54 percent, driven by diversity and inclusion, health and safety, and employee engagement. Environmental metrics such as reducing emissions have also seen greater adoption, from 40 percent in 2021 to 49 percent in 2022.

https://www.ft.com/content/4c126526-bd30-4bc4-b5e0-3a1b6adceba0 Bonusbonanza increases salaries of FTSE 100 bosses by almost a quarter

Adam Bradshaw

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