This report from the CIPD and the High Pay Centre examines FTSE 100 CEO pay packages, which show that rewards at the top have dropped by almost a fifth, but still remain extraordinarily high. 

The report looks at how CEO pay in the UK’s largest firms has changed between the financial year to 2015 and the financial year to 2016. It finds that over this period, FTSE 100 CEO remuneration has fallen by 17%, from £5.4 million in 2015 to £4.5 million in 2016.

However, while there has been a significant drop in CEO pay, it would still take the average UK full-time worker on a salary of £28,000 (median full-time earnings) 160 years to earn what an average FTSE 100 CEO is paid in just one year. Although the average pay packages of the 25 highest paid CEOs have dropped by 24% to £9.4m in 2016, rewards for the 32 lowest paid chief executives in the FTSE 100 have increased as firms ‘chase the median’. 

The CIPD and the High Pay Centre look forward to seeing the Government’s responsible business reforms when they come out later this year.

Recommendations

CEO pay

We would encourage companies to disclose:

  • their FTE figures alongside their headcount number and include a breakdown by region of both FTEs and staff costs, so that a comparison of UK-only pay ratios can be made
  • employee figures for contractors as well as permanent staff, for a deeper understanding of the true size of the business
  • pay ratios within their organisation. This can include the ratio of the highest to the lowest paid employee, pay ratios between management tiers and the ratio between the pay for the CEO and the median worker
  • a graph showing the skew of a company income distribution over time, to show whether or not it is becoming more evenly distributed
  • how they invest in, lead and manage their workforce for the long term.

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Louisa Shand, Governance and Risk Adviser, CIPD

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CEO pay

Episode 93: This episode addresses the contentious issue of CEO pay, the growing gap between average workers and the top executives in an organisation and what role the HR Director could and should be playing.

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