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FTSE 100 CEO pay rises another 10%

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The High Pay Centre finds little sign of CEO pay in the FTSE 100 slowing down

CEO pay in the FTSE 100 is continuing to grow at a double digit rate, according to research released by the High Pay Centre.

The High Pay Centre’s figures show the average FTSE 100 CEO pay package was £5.48 million in 2015, up from £4.96 million in 2014.

Median FTSE 100 CEO pay in 2015 was £3.97 million, a smaller increase from 2014's £3.87 million. The High Pay Centre suggests that this is because increases in average pay are driven by a small number of very highly paid CEOs, such as WPP’s Martin Sorrell who received a payout of £70.5 million in 2015 (up from £43.98 million in 2014).

However, the data also shows that the ratio between CEO and employee pay in the FTSE 100 has fallen slightly. In 2015 the ratio stood at 140:1, compared with 148:1 in 2014.

Director of the High Pay Centre Stefan Stern said there appears to be “no end yet in sight” for the rise in CEO pay. “In spite of the occasional flurry from more active shareholders, boards continue to award ever larger amounts of pay to their most senior executives,” he added.

Prime minister Theresa May recently called for more transparency around high pay and for companies to reveal the ratio between CEO pay and average workers'. No FTSE 100 company currently does this. May has also said she wanted to put workers on company boards and make shareholder votes legally binding on executive pay.

Stern said the High Pay Centre supports May’s suggested interventions, adding: “Businesses could save themselves a lot of grief, and do something to restore their reputations, if they listened to workers first before awarding these bumper pay packages. The question the outside world keeps asking is ‘How much?!’ How much better to try and answer that question internally first with concerned yet supportive employees?”

Speaking to HR magazine about corporate governance, Norman Murray, former chairman of FTSE 100 oil firm Petrofac and current chairman of premium spirits company The Edrington Group, said executive remuneration was “getting out of hand” and encouraged HR directors to get involved.

“HRDs can pull things back to schemes that are sensible and more fit for purpose,” he said. “I would put the onus on the HR director to step up and just do it – talk to the chair and talk to the RemCo chair.”

CIPD chief executive Peter Cheese called the difference between CEO and employee pay "shocking", and echoed the High Pay Centre's call for published pay ratios.

"This will serve to encourage accountability and force a greater focus on senior pay among key stakeholder groups, such as investors, who can help to drive change and hold businesses and senior individuals to account," he said.

"We also need to see more action from the top – either from boards or more chief executives themselves taking a public stand and putting a stop to these inexplicably high salaries and bonuses. As we head into an uncertain economy this can only become a more pressing issue.”