Analysis of FTSE 100 CEO pay packages revealed that rewards at the top of businesses have fallen by 17% from 2015 to 2016.
The findings, from the Chartered Institute of Personnel and Development (CIPD) and the High Pay Centre, found that the average annual pay packet stood at £4.5 million down from £5.4 million in 2015.
Despite the fall, the pay ratio between FTSE 100 CEOs and the average full-time pay packet (£28,000) was 129:1 – for every £1 the average employee is paid, their CEO received £129.
Peter Cheese, chief executive of the CIPD, hoped that the fall in average CEO pay was the beginning of a re-think on how these leaders are rewarded.
“Rather than focusing predominantly on share price or short term profit, we need a much more balanced scorecard for performance that also takes account of other indicators of success such as investment in people, social responsibility and accountability, and long-term value creation,” he said.
The analysis also raised concerns that some businesses were seeking to close the gap between the highest and lowest paid FTSE 100 CEOs by ‘chasing the median’, which currently stands at £3.45 million. It was found that the pay of the 25 highest paid leaders dropped by 24%, but the 32 lowest paid CEOs saw an increase in their overall package.
Stefan Stern, director of the High Pay Centre, said: “We should beware the ratcheting up of pay lower down the FTSE league table as CEOs and remuneration committees ‘chase the median’. This helps nobody but a few lucky top execs.”
