Support drops for remuneration reports FTSE 100’s biggest players feel the pressure

The news comes figures released by the High Pay Centre and the Chartered Institute of Personnel and Development this week showed that the mean remuneration received by CEOs of FTSE100 listed companies in 2017 was £5.7 million.

The average FTSE 100 fat cat’s salary currently stands at 409 times that of care workers, or the same as the annual earnings of 286 refuse collectors, 165 paramedics - or 38 Prime Ministers.

For CEOs in the FTSE Top 30, pay fell slightly in 2017 while average pay of CEOs across the FTSE100 rocketed by 11 per cent between 2016 and 2017 – compared to an average 2 per cent increase for UK workers over the same period.

The median single figure package for a FTSE 100 CEO was around £4m in 2017, up from £3.6m in 2016 but down from £4.3m in 2015. More than a third of FTSE 100 CEOs received no increase in base salary in 2017.

Bonus pay-outs in respect of 2017 performance remained constant, with a median of 72 per cent of maximum compared with 77 per cent two years ago.

The increase in dissatisfaction amongst shareholders highlighted by Deloitte follows proxy agencies issuing eight recommendations to vote against or abstain from voting on top 30 firms’ remuneration reports in 2018 – significantly higher than the two against recommendations issued in 2017.

This is despite median CEO pay levels falling slightly and average share prices rising in the top 30 firms.

In comparison, in the FTSE 100 as a whole, 14 per cent of companies received less than 80 per cent approval, versus 8 per cent in 2017 this year.

There were 14 recommendations from proxy agencies to vote against or abstain remuneration resolutions in the full FTSE 100, compared to 10 in 2017. Eleven of the fourteen companies who received a vote against or abstain from the proxy agencies received less than 80% approval which shows their influence.

Of those firms receiving lower votes on remuneration, four were ‘repeat offenders’ – firms who also received low votes last year.

Stephen Cahill, vice-chairman at Deloitte, said: “Despite a quieter AGM season last year, the 2018 season has shown that executive pay remains an area of shareholder focus. We have seen a much more challenging voting season, in particular for FTSE 30 companies, despite it not being a policy year for the majority. This reflects a tougher stance taken from proxy agencies in respect of the largest companies, as well as continued pressure on repeat offenders.

“Shareholders and proxy agencies are increasingly hardening their line not just on pay levels, but where companies are failing to act on previous concerns, in particular around transparency of pay arrangements,” he added.