Our analysis shows that median CEO pay has declined marginally between 2018 and 2019, but the typical FTSE 100 CEO still gets £119 every time the average UK full-time worker earns £1 (compared to £123 in 2018). We also found no evidence that companies have begun to address the fundamental flaws in the executive pay-setting process.

36 firms have cut CEO pay due to the impact of COVID-19, but the most common action has been to cut executive directors’ salaries or non-executive directors’ fees by 20%. Considering that salaries typically make up just one fifth of total CEO earnings, these cuts seem relatively small.

This underscores the need for remuneration committees (RemCos) to rethink the way they set executive pay. Peter Cheese, Chief Executive of the CIPD says: 'Now more than ever RemCos should be looking at wider workforce issues and organisational cultures to help them determine CEO pay, rather than just financial targets being met.'

While this research is based on the UK context, the broader implications should be of interest wherever you are based. 

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Key findings

• The highest paid FTSE 100 CEO received a total pay package of £58.73 million. This is 1,935 times the median salary of a full-time UK worker.
• Six firms paid their CEOs more than £10 million in total.
• For the financial year ending 2019, FTSE 100 CEOs took home a median pay package worth £3.61m, which is 119 times greater than the median earnings of a UK full-time worker (£30,353).
• 70 companies disclosed the pay ratio between their CEO and the median pay of their UK employees. The highest quoted pay ratio was 2,605:1 and the lowest was 15:1. The median was 84:1.
• The median pension contribution (or equivalent) given to a CEO is £189,000, representing 24% of their median salary. In comparison, pension contributions for employees represents 7.2% of their salary.

The changes we want to see

• The company’s workforce should have the opportunity to feed into the CEO pay process, such as through an employee representative on the RemCo or an employee opinion survey, etc.
• Companies should ensure CEO reward packages are simpler and linked to fewer - but more meaningful - measures of performance.
• RemCos should ensure that the benefits CEOs and other senior executives enjoy are fair in relationship to what the rest of the workforce receive, such as health benefits and pension contributions.
• In 2021, when all FTSE 100 firms are due to publish their CEO pay ratio data, they should demonstrate to their employees, customers and investors the steps they’re taking to ensure that pay processes and outcomes are fair and affordable.
• The UK Corporate Governance Code should be amended to require publicly limited companies to report on the ethnicity of their senior management teams and their direct reports.