CEOs of U.K.’s Biggest Companies See Pay Leap by 23%

(Bloomberg) -- The chief executives of the U.K.’s largest companies saw their compensation jump by 23 percent on average between 2016 and 2017, according to a new study that highlights the widening income gap with rank-and-file workers in the country.

The mean pay for the heads of the FTSE 100 companies climbed to 5.66 million pounds ($7.23 million) in 2017, from 4.58 million pounds a year earlier, the annual analysis from the non-profit human resources organization CIPD and the High Pay Centre think tank showed. Those figures were exacerbated by payouts to Persimmon Plc CEO Jeff Fairburn, whose compensation soared 22-fold to 47.1 million pounds, and to Melrose Industries Plc’s Simon Peckham, who raked in 42.8 million pounds, a whopping 43 times his 2016 pay.

The figures -- which include base salaries, bonuses and other incentive payouts -- show that top executives are back to making about 145 times the average pay of their employees despite calls by Prime Minister Theresa May to check executive greed. Her administration plans to make publication of pay ratios mandatory, and has toyed with annual binding votes by investors on remuneration reports and a ban on the award of complex share-based pay programs.

“Despite increased investor activism and the planned introduction of pay-ratio reporting, the evidence suggests that very little is changing when it comes to top pay in the U.K.,” Peter Cheese, the chief executive of the CIPD, said in the statement. “Pressure is building in the system,” he warned.

The U.K. figures are still a far cry from their U.S. counterparts. Chiefs of S&P 500 companies took home an average $20.9 million in 2017, including salaries, bonuses and payouts of equity awards that vested or were exercised, up about 24 percent from the prior year, according to data compiled by Bloomberg.

Other highlights:

• The average salary for a full-time worker in the U.K. is 35,423 pounds
• Full-time staff would need to work 160 years to earn an average CEO’s pay
• The CEOs’ median pay rose 11 percent to 3.93 million pounds in 2017
• Women made up 7 percent of the FTSE 100 CEOs, but got 3.5 percent of remuneration
• Highest-paid female is GlaxoSmithKline Plc’s Emma Walmsley, with 4.88 million pounds

Take-home compensation -- measuring what an executive actually pockets in a year from salary, bonuses and payouts of awards from prior years -- can vary drastically year over year. Bosses get the bulk of their big payouts from equity-based incentive programs, from which payouts often come in uneven increments. They can also choose when they want to cash in certain awards, such as options.

Persimmon, which builds affordable housing in the U.K., in February agreed to reduce payouts from a long-term incentive plan put into place in 2012 after it triggered public furor and led to the resignation of Chairman Nicholas Wrigley in December.

Melrose, fresh from its hostile takeover of British engineer GKN Plc, pledged in May to review the pay packages of its top executives amid criticism from a shareholder advisory firm. Investors will be consulted over the next few months on a new pay deal taking effect from 2020, it said at that time.

--With assistance from Anders Melin and Jenn Zhao.

To contact the reporter on this story: David Hellier in London at dhellier@bloomberg.net

To contact the editors responsible for this story: Aaron Kirchfeld at akirchfeld@bloomberg.net, Chitra Somayaji, Amy Thomson

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