UK - Basic salaries of top chief executives are rising at over three times the rate of inflation despite increased shareholder scrutiny, new research reveals.
Watson Wyatt says the rewards for top earners continue to increase disproportionately – although there has been some moderation in the past 12 months.
The consultant’s study – based on a matched sample of chief executives of FTSE100 companies – reports a median basic salary increase of 7.8 percentage points since 2002.
The average salary for chief executives this year was £650,000, with annual bonus payments, long-term incentives and direct compensation taking payouts to an average of £1.5m a year.
Proxy voting agency, Manifest said remuneration reports would come under increased scrutiny as the gulf widened between staff and executives.
Head of research Yvonne Stevens said: “There is concern about pay rising disproportionately for those at the top of companies and shareholder activism looks certain to continue gathering momentum.”
And Watson Wyatt partner Calvin Johnson added that shareholders were more reluctant to “reward failure”.
He said: “Shareholder pressure now seems to be on shifting the pay balance from fixed to variable rates.”
The Watson Wyatt report also claimed “imminent changes” to the pension tax regime would limit the tax effectiveness of pension plans for high earners, including those who were not affected by the 1989 earnings cap.
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