The average FTSE 100 chief executive was handed a modest 1pc pay rise last year, while four in ten bosses had their salaries frozen, according to new research that suggests the bruising shareholder protest votes of recent years have encouraged greater boardroom restraint.
Four years after a series of large firms suffered embarrassing shareholder rebellions about their senior teams’ pay packets in the “shareholder spring”, the average blue-chip boss earned £4.3m last year, or 1pc higher than in 2014.
This means top bosses received a smaller pay rise than the 2pc increase seen in the national average earnings, although since 2011 their total pay has increased substantially from £3.1m, according to figures from PwC.
Four in ten bosses were handed a salary freeze at their last pay review, and the average base salary is now 2.5pc higher at £936,000, according to PwC’s review of the 47 blue-chip firms that have already published their annual reports for the year.
Bonuses increased by an average of 6.3pc, but this was balanced out by a 6.4pc decline in the current value of long-term share awards given to chief executives.
Chief financial officers, who are now paid an average of £2.5m, enjoyed an overall pay rise of 3.5pc.
Some firms have stirred fresh investor unease this year with large bonuses, such as the $20m that loss-making BP plans to pay its chief executive Bob Dudley, subject to a shareholder vote this week.
HSBC is also facing opposition to its pay packages. The shareholder advisory body Pirc said the bank’s maximum potential bonus was worth a “highly excessive” 535pc of salary, adding that while HSBC has cut some of its pay caps, it has not gone far enough in reducing its cash in lieu of pensions limit from 50pc to 30pc.
Three-quarters of bosses’ long-term share awards rose or fell by at least 25pc last year, PwC said, suggesting that pay structures allow for big adjustments when a company does particularly well or badly. Almost one in ten chiefs received no long-term incentive last year.
However, PwC noted “widespread frustration about the complexity of executive pay” that could usher in simpler bonus schemes.
“Shareholders expect total payouts for the year to be a fair reflection of overall performance and greater transparency,” said Fiona Camenzuli, employment partner at PwC.
“The improvement in the quality of bonus target disclosure has been a triumph of collective shareholder action – the result is a definitive move to a market norm of full retrospective target disclosure to enable investors to assess the toughness of targets.”
The “shareholder spring” in 2012 brought a string of investor rebellions against excessive boardroom pay, with Barclays, Aviva and Astrazeneca among the blue-chip firms feeling shareholders’ wrath.
Pay packets for bosses at large American firms have reportedly fallen 3.8pc to $10.8m in the past year.