More than a third (36%) of FTSE 100 CEOs received no salary increase this year, according to research from PricewaterhouseCoopers (PwC).
PwC’s Taking stock – Review of 2015 AGM season report revealed that the chief executives who did get a raise saw a median 3% pay increase, taking the median base salary to £891,000 in 2015.
Median bonus pay-outs remained unchanged for the past three years, at 72% of the maximum award available. CEOs at four out of five businesses (81%) were paid more than half their maximum bonus, while one in 25 (4%) companies did not award any bonus to their CEOs at all.
Drew Matthews, partner at New Bridge Street (part of Aon), said that the figure reflects increased executive remuneration restraint. “I don’t think we have reached a glass ceiling on executive pay but remuneration committees are showing more restraint,” he told HR magazine. “We will have to wait and see if this restraint continues over the next 12 months, given continued improvements in the economy and a more pro-business government.”
Tom Gosling, executive pay partner at PwC, added: “Pay has also become harder to earn, with longer holding periods and clawback.”
Gosling also reported a “growing dissatisfaction with long-term incentives, which are often seen as a lottery and too complicated”.
“In response companies are looking for performance measures that more closely link to company strategy. At the same time they’re satisfying shareholder demands by increasing the length of time that shares must be held,” he said.
Gosling added that it is important business continues to show restraint on CEO remuneration. "With the average FTSE 100 CEO earning in a year what several ordinary people might earn in a working lifetime, remuneration committees need to make sure that pay-outs are fully justified by performance to help rebuild trust in business,” he said.
