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CEOs facing backlash for pay hikes

CEOs facing backlash for pay hikes

Tuesday 27 July 2021

A Tortoise analysis reveals that 38 companies in the FTSE 100 have awarded bigger pay packages to their CEOs during the pandemic – a time of general economic hardship and rising inequality


For many businesses and individuals, the past year has been one of great financial stress. They’ve had their incomings affected by the pandemic, and have therefore been forced to think even more carefully about their outgoings. Every pound, dollar or yuan has had to be counted.

But there are some individuals who have managed to avoid this burden. New analysis by Tortoise reveals that 38 of the 97 companies in the FTSE 100 who have released data for until or after June 2020 have awarded pay rises to their CEOs.

Of course, this means that 59 companies in the FTSE 100 did not award pay rises to their CEOs. The majority have seen their pay packages – not just the base salary, but an overall figure including other forms of remuneration such as shares and bonuses – shrink during the pandemic. The median CEO was paid £2.6 million in the most recently reported year, a £500k (or 16 per cent) decline from the previous year.

Tim Steiner of the online grocery store Ocado, who was in 2019 the UK’s highest paid CEO, saw his pay fall the most. He received £6.9 million during the year ending March 2021, down from £59 million the year before. 

Some of this apparent restraint has been driven by shareholders, who have increasingly come out against big pay rises at a time of rising inequality. Major investors – such as Fidelity, Legal and General, Railpen, and Schroders – have explicitly asked companies not to put executives ahead of the rest of the workforce.

But the message hasn’t got through to all companies. Here are the 38 companies that awarded larger pay packets to their CEOs after the pandemic began:

The largest increase, in absolute terms, was awarded to Peter Jackson, the CEO of the sports betting firm Flutter Entertainment: his pay rose from £2 million to £7.5 million. In percentage terms, Jackson’s increase (258 per cent) was surpassed only by the CEOs of Smith & Nephew (538 per cent) and Reckitt (421 per cent).

Overall, 16 of these pay rises were worth over 50 per cent more than the previous year’s total. Other key findings include:

  • The FTSE 100 boss with the highest pay packet – of £15.4 million – is Pascal Soriot of AstraZeneca, the company behind one of the main Covid vaccinations. This represents a 0.9 per cent increase on the previous year.
  • Even when we looked at just base salaries, some large increases were evident. The biggest in absolute terms were Prudential, at £240,000 and Flutter Entertainment, at £103,000.
  • Eight of the 38 companies – Admiral Group, British Land, Imperial Brands, Kingfisher, Land Securities, Mondi, Phoenix Group, and Standard Life Aberdeen – had a change in CEO during the time period, with higher pay packages for the new CEOs.

Some CEOs have been rewarded after strong company performance. Simon Arora, the CEO of the bargain retailer B&M, which saw bumper sales during the pandemic, is an example of that correlation: his pay package was increased by 198 per cent, from £1.2 million to £3.6 million.

But some of these pay rises have also been awarded in the face of strong opposition from shareholders. For example, 62 per cent of shareholders rejected Rio Tinto’s pay plan at the Australian mining company’s annual meeting in May, following the controversial destruction of an ancient Aboriginal site last year – though the vote was not binding. Similarly, shareholders have recently voted out the director who was tasked with remuneration at JD Sports.

All of this increases the focus on the gap between executives and the rest of their workforces. Since 2019, publicly listed companies have been obliged to publish the ratio between CEO pay and average staff pay. Tim Steiner tops this particular chart: despite his pay cut, he still earns 312 times more than the average worker at Ocado.

Over the past year, this ratio has increased for companies included on our graphic, above: by 124 and 109 per cent, respectively, for B&M and Flutter Entertainment. But it is worth noting that the same goes for companies not included on the graphic: BHP, Hargreaves Lansdown and National Grid plc didn’t give pay rises to their CEOs, but the ratios between CEO pay and average staff pay did increase year on year.         

For a wider perspective, Tortoise tracks CEO pay against the median UK wage as part of our Responsibility100 Index, a ranking of FTSE 100 companies according to their social and environmental performance that we produce in partnership with Teneo. The next update of the R100 will be released in October. 


Methodological note

Our analysis uses the most recently published annual reports of FTSE 100 companies. Remuneration report dates vary.

  • 4 companies report figures from the financial year ending March/April 2020.
  • 5 companies report figures for the financial year ending June 2020.
  • 1 company reports figures for the financial year ending July 2020.
  • 4 companies report figures for the financial year ending September 2020.
  • 1 company reports figures for the financial year ending November 2020.
  • 59 companies report figures for the 2020 calendar year.
  • 1 company reports figures for the financial year ending January 2021.
  • 25 companies report figures for the financial year ending March 2021.

We chose to compare companies that have released pay data for at least three months after the UK’s first lockdown in March 2020, to show the impact of Covid on CEO salaries. This has excluded three companies from our analysis: Berkeley Group Holdings, Smiths Group, Scottish Mortgage Investment Trust.


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