FTSE 100 directors’ pay rises by 21%

Executive pay

FTSE 100 directors’ total earnings have risen by more than 21% in the past year while average wages in the UK have stagnated, according to research by Incomes Data Services (IDS). 

Its IDS Directors pay report 2014/15, which collates data from organisations’ annual reports, found that the overall earnings growth was driven by a 44% increase in long-term incentive share awards and a 12% increase in bonuses for FTSE 100 directors.

However, salary rises remained muted, increasing by just 2.5%.

The long-term impact of high earnings growth has widened the pay differential between FTSE 100 chief executives and the rest of the workforce.

The report found that between 2000 and 2014 the median total earnings for FTSE 100 chief executives increased by 278%, while the corresponding rise in total earnings for full-time employees was 48%.

In 2014, a FTSE 100 chief executive earned 120 times more than a full-time employee.

The average total earnings were £2.4 million for a FTSE 100 director, rising to £3.3 million for a FTSE 100 chief executive, while the median salary was £832,300.

The research found that media, marketing and telecommunication chief executives have the highest total earnings of the FTSE 100 listed organisations, with chief executives earning £6.9 million.

The lowest paying sector for chief executives was the retail and distribution industry, with total earnings averaging £1.4 million.

Steve Tatton, editor of the IDS report, said: “FTSE 100 directors have seen their total earnings jump sharply in the last year, fuelled by a rise in the value of share based awards. Bonus payments have also recovered strongly following a downturn last year.

“The pattern of pay growth highlights the complex make up of directors’ remuneration.

“Salary rises may be modest but this can be more than made up for by the receipt of incentive payments.

“When such incentives pay out, they can pay out substantial sums, giving a significant boost to directors’ earnings.

“While the new rules seemingly signalled the beginning of a new era in remuneration disclosure and shareholder power, it still remains to be seen whether the reforms will lead to an improvement in boardroom pay transparency.”