According to chartered accountancy firm Grant Thornton, FTSE 100 chief executives received an average increase in pay of nearly 50 per cent last year. Basic salaries remained relatively similar, with CEOs of that largest UK companies earning £583,291 in 2014. However, bonus and stock option increases of upwards of five times the previous year accounted for most of the change.
The review, which uses annual reports from top companies, noted that companies shelled out bonuses as high as 128 per cent, or £1.21 million. However, on average, companies dished out bonuses at a level of 111 per cent, up from 98 per cent the previous year. The maximum bonus any CEO can receive topped out at 157 percent, up 6 points from last year’s cap.
Analysts have posited that the increases parallel an increase in company productivity. Nearly 75 per cent of companies include clawback policies that require executives to repay any bonuses if company performance decreases after bonus payouts. However, at the time of this writing, no company required CEOs to repay any losses.
All of this is part of a remuneration process aimed at creating more transparency between companies and the public. Public outcry arose after reports that chief executives of financial companies earned an average of £2.28 million in base salary and bonuses. I always find hard to justify such pay rise., what about you?