An annual assessment of FTSE 100 pay packages, released today, shows that median pay for chief executives fell by 13% between 2017 and 2018. However, the median CEO salary of £3.46 million a year is still more than 117 times that of the median UK full-time worker earning £29,574. In addition, 1,394 'key management personnel’ across the FTSE 100 are paid an average (mean) of £1.5 million each.

These are the findings from the annual analysis of executive pay from the CIPD, the professional body for HR and people development, and the High Pay Centre think tank.

Despite efforts to improve boardroom diversity, a FTSE 100 CEO is still more likely to be named Stephen or Steve than be a woman (and just as likely to be called David or Dave). In 2018, there were just six female CEOs in the FTSE 100, a fall from seven in 2017. While women make up 6% of the FTSE 100 CEOs, they earn just 4.2% of the total pay. However, this is a slight improvement on last year when the seven female CEOs earnt just 3.5% of total pay. 

For the first time, the CIPD/High Pay Centre extended its analysis to consider the FTSE 250, the 250 organisations listed after the FTSE 100 on the London Stock Exchange. It shows that, in contrast to swings seen across FTSE 100 pay in the last three years, median FTSE 250 CEO pay has remained relatively steady. It was £1.58 million for FYE 2016, rose by 2% to £1.61 million the next year, and dropped back down to £1.58 million in 2018. 

This year’s analysis also looked at the pay for ‘key management personnel’ for the first time. This typically includes the chief executive as well as non-executive and executive board members and senior managers. However, there was significant variation in reporting with different companies’ disclosures covering between two and 32 individuals. More than £2.08 billion was spent on FTSE 100 key management personnel remuneration in 2018, dwarfing the £465.4 million paid out to FTSE 100 chief executives.  

Peter Cheese, chief executive of the CIPD, the professional body for HR and people development, said: 

 “We need to challenge excessive pay, especially when too often it doesn’t match up to company performance. Boards, and remuneration committees in particular need to review how they reward their top executives. They need to ask if it is fair when set against the overall reward strategy and practices of the organisation and if it is warranted in terms of performance. After all, success is the collective endeavour of the many, not just the few at the top. And that point has never been more important in these times of significant uncertainty.” 

In response to ongoing high pay, the CIPD and the High Pay Centre make the following recommendations: 

1. Single figure reporting requirements and guidance should be extended to cover key management personnel and pay for the top 1% of earners should be disclosed, to further improve transparency and ensure this area of reporting practice improves.  

2. Broaden the remit of remuneration committees to consider wider workforce reward practices, and understanding of organisational culture, fairness and investment in people. 

3. Link CEO pay to both financial and non-financial measures of performance to encourage longer term investment in the business in critical areas such as developing the workforce and organisational culture, in research and development, and in corporate social responsibility.  

4. Simplify CEO reward packages and ensure they are linked to fewer and more meaningful measures of performance. This would make it easier to understand how CEOs are being rewarded and make CEO remuneration reporting more accessible to investors, employees and other key stakeholders.