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More FTSE 100 companies are pushing to “significantly” boost executive pay and fast-tracking review periods, as global businesses seek to remain competitive with US peers.
A report by consultancy Deloitte shows 24 of 55 companies that have published their annual reports for 2024 are seeking shareholder approval for new pay policies, compared with 16 at the same point last year.
Of the 24 companies, 13 are looking to “significantly increase incentive levels” or are pushing for “more innovative” pay structures with a mix of performance-related bonuses and restricted share awards, as well as higher long-term incentives. This compares with nine a year ago.
“We started to see this trend last year, with companies making their pay packages globally competitive, and this has now accelerated,” said Mitul Shah, partner in Deloitte’s executive remuneration and reward practice. He said the competition to attract and retain talent had intensified.
Of the companies proposing changes, 10 are submitting new pay policies ahead of the shareholder review period every three years, up from three companies who went early a year ago, underscoring the pressure they are under to make changes.
The US has long awarded significantly higher executive pay — across base salary and bonuses, stock awards and performance-linked incentives — than UK counterparts.
In recent years this has fuelled concerns about UK competitiveness even as high pay remains a reputational risk amid cost-of-living anxieties and political scrutiny.
The companies that publish their annual reports early tend to be the largest global players, Shah said.
FTSE 100 companies with large global operations, US divisions or aggressive American rivals face the greatest pressure to try to match US pay levels.
Shareholder revolts over pay have historically constrained UK boards, but more recently there has been a shift in tone from investors who are more willing to engage on a case-by-case basis.
“It’s not about giving companies a blank cheque but just that investor sentiment is more open to reviewing pay,” said Shah. “If the rationale is strong enough then companies will get a good vote.”
Buoyed by recent wins at London Stock Exchange Group and Smith & Nephew, which last year secured shareholder backing for multimillion-pound executive pay increases, more FTSE 100 companies are pushing for higher pay, boardroom advisers say.
British American Tobacco and Compass Group — both among the top 15 companies on the London Stock Exchange by market value — are among the latest to propose higher pay packages for their chief executives.
The UK’s scrapping of the EU bonus cap has spurred banks such as Barclays, HSBC and Standard Chartered to seek shareholder approval for bigger payouts to CEOs hitting performance targets.
Investors and advisers said companies were also facing demands to pay more for management roles below chief executive to attract and retain people.
The median FTSE 100 CEO package for 2024 increased by 7 per cent — from £4.49mn in 2023 to £4.79mn last year, Deloitte data shows.
