Cuts to top FTSE100 bosses' pay 'not enough' say campaigners

New research from the CIPD and the High Pay Centre finds that, while most of the 36 companies have used a combination of measures to cut pay, these are mainly superficial or short-term.

The most common measure, taken by 14 companies, has been to cut salaries at the top by 20 per cent. However, the CIPD says salaries typically only make up a small part of a FTSE 100 CEO’s total pay package. 

Its report finds that 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).

This is broadly the same as the median FTSE 100 CEO salary for the financial year ending 2018 (£3.63m) and only represents a 0.5% decrease.  

The report argues that when performance-related pay is almost guaranteed – as appears to the be the case when the overwhelming majority of policies pay out every year – its value as a reward or incentive is greatly weakened. 

Huge incentive payments also risk giving individual executives disproportionate credit for performance dependent on a much wider range of factors, such as the economic context or the contribution of the company’s wider workforce, it said.. 

The CIPD and High Pay Centre say the findings underscore the need for reform to the remuneration committees that set executive pay. Building on the amended UK Corporate Governance Code 2018 they want decisions on top pay and bonuses to be more fairly aligned with wider workforce pay, and to incentivise other areas critical to longer term sustainability. This includes investment in training and improvements in company culture and diversity, as well as customer experience and the environment.   

Peter Cheese, Chief Executive of the CIPD, the professional body for HR and people development, said:  “It doesn’t look like the pandemic has proven to be an inflection point for executive pay yet. The bulk of cuts made so far appear to be short-term and don’t signify meaningful, long-term change. 

"Pay among the FTSE 100 will probably fall next year, but this is more likely to be due to wider economic circumstances rather than a fundamental change in approach to executive pay.