Chief executive pay across the UK’s largest listed companies has risen for the third consecutive year, setting a new record. Analysis by the High Pay Centre, published this week, shows the median pay package for FTSE 100 leaders climbed to £4.58 million in the last financial year, compared with £4.29 million the year before.
The watchdog said total executive pay across the index reached more than £1 billion, up sharply from £757 million in the prior year. Its director, Luke Hildyard, described the scale of rewards as “a striking contrast with the pay and conditions of the wider workforce.”
The data highlights a deepening pay gap. The median FTSE 100 chief executive now earns 122 times the salary of the median full-time UK worker, while across the wider FTSE 350 the ratio stands at 52. The report also noted persistent gender disparities, with female CEOs earning significantly less on average than male peers.
Much of the increase was driven by long-term incentive plans, which were awarded to 84 out of 100 FTSE leaders. The High Pay Centre has called for reforms to reduce reliance on such instruments, alongside measures to strengthen the role of workers in pay-setting and to improve transparency in remuneration policies.
The Times reported that 13 FTSE 100 executives earned more than £10 million last year, up from ten a year earlier. AstraZeneca’s Pascal Soriot received £14.7 million, while BAE Systems’ Charles Woodburn took home £11.7 million. Melrose Industries recorded a combined executive payout of £212 million, including long-term awards to senior leaders.
Shareholder advisory firms have also signalled unease at the scale of payouts. Glass Lewis and ISS, two of the largest proxy advisers, have recommended votes against certain remuneration reports, arguing that schemes tied to share-price gains can generate windfalls even when long-term performance remains uneven.
Market observers say rising packages reflect the UK’s efforts to retain global talent in competition with US and European rivals. Some executives argue that incentive-based pay aligns their interests with investors, particularly in sectors reliant on long-term innovation. However, critics point to weak links between pay and productivity, and warn that growing disparity risks damaging corporate reputation.
The latest figures arrive amid ongoing cost-of-living pressures in the UK. Average real wages have stagnated, while inflation has eroded household purchasing power. Against that backdrop, scrutiny of executive pay has sharpened, with unions and governance groups urging boards to show restraint.
As the AGM season approaches, investors are expected to test whether boards are willing to adjust policies. The High Pay Centre has urged companies to consider greater workforce representation in remuneration committees and to provide clearer justification for long-term incentive grants.
With public attention focused on pay equity, and regulators emphasising the need for stronger governance, the trajectory of chief executive compensation is likely to remain under close watch. Whether companies adjust their approach or continue to follow international benchmarks may determine the tone of shareholder engagement in the year ahead.
