- FTSE companies considering CEO pay raises amid increasing average salaries
- Deloitte finds 16 FTSE 100 firms contemplating compensation policy revisions
- AstraZeneca faces shareholder revolt over £18.7 million CEO compensation plan
A study reveals that the number of Footsie companies advocating for pay increases for their chief executives has increased since the average salary reached £4.5 million.
As the discourse surrounding boardroom excess heats up, Deloitte’s analysis revealed that sixteen FTSE 100 companies are considering revising their compensation policies this year.
Nine of these individuals intend to substantially augment the utmost amount proposed to their superior.
Only four blue chips were vying for substantial pay raises at this time last year, according to a report by the accounting and auditing behemoth.
The study is predicated on the initial 55 Footsie companies to disclose their annual reports in the current year.
These demands are made even though the average compensation for an FTSE 100 CEO increased by 4% to £4.5 million in the previous year.
Boardroom compensation has reemerged as a significant concern in the City, as corporations strive to contend with American counterparts who generally offer greater salaries and incentives.
AstraZeneca was rocked by an investor revolt last week, as 35% of shareholders voted against an agreement that could pay £18.7 million this year to chief executive Pascal Soriot.
Critical shareholder advisory firms Glass Lewis and ISS advised investors to vote against the ‘excessive’ compensation plan at the pharma giant’s annual meeting, which sparked the backlash.
Nevertheless, the shareholders ultimately approved the package due to the vociferous support of Soriot’s supporters, including the company’s largest shareholder GQG Partners, which deemed him “massively underpaid.”
Michel Demare, chairman of AstraZeneca, criticised proxy advisers over the weekend, claiming that their “double standards” “do serious harm” to the competitiveness of British companies.
However, the pressure overcompensation is not limited to the pharmaceutical industry in the UK. Smith & Nephew is currently confronted with its conflict following last week’s shareholder appeal to reject a salary increase for its United States-based executive.
If he fulfils his objectives, the London-listed medical equipment company’s chief executive Deepak Nath could receive £9.4 million in compensation the following year, according to its proposals.
However, ISS has deemed it “excessive” and advised investors to vote against it at their annual meeting next month.
Additionally, by the end of the month, the London Stock Exchange Group hopes to persuade its shareholders regarding the compensation of its CEO, David Schwimmer.
As per its proposed strategy, he will be allowed to double his existing maximum package of £6.25 million.
Partner at Deloitte Mitul Shah, who advises businesses on their compensation policies, attributed the increase in “more radical pay proposals” to the intensifying competition for talent.
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“Many of these companies have a significant presence in the United States, and they cite the wage gap between the United Kingdom and the United States as a challenge when competing for and retaining senior talent in the global marketplace,” he said.
Mark Austin, an attorney at the global law firm Latham & Watkins, stated, “Large international London-listed companies must offer competitive compensation if they wish to compete for talent internationally.”
Prominent City businesspeople, such as Julia Hoggett, chief executive officer of the stock market division of the LSE Group, advocate for increased executive compensation. However, some have expressed apprehension regarding the increasing emphasis on executive compensation.
According to Luke Hildyard of the High Pay Centre, this development undoubtedly benefits chief executives and other high-earning professionals. The positive ramifications for the remainder of the nation are yet to be determined.
