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As global companies seek to stay competitive with their US peers, more FTSE 100 companies are pushing to “significantly” boost executive pay and quick tracking review periods.
The consulting company’s report shows that 24 of the 55 companies publishing their annual reports in 2024 are seeking shareholder approval for the new payroll policy, compared to 16 at the same time last year.
Of the 24 companies, 13 are either aiming to “significantly improve incentive levels” or are pushing for a “more innovative” pay structure that combines performance-related bonuses with limited share awards and higher long-term incentives. This is compared to 9 a year ago.
“Last year, we started seeing this trend. Companies are competing for wage packages worldwide, which is accelerating now,” said Mithul Shah, Deloitte’s partner in executive compensation and compensation practice. He said competition has increased to attract and retain talent.
Of the companies proposing changes, 10 submit new payroll policies every three years ahead of the shareholder review period, highlighting the pressure to make changes from the three companies they made a year ago.
The US has long been awarding rather higher executive salaries than its UK counterparts, across base salaries and bonuses, stock awards and performance-related incentives.
In recent years, this has fueled concerns about the UK’s competitiveness, despite the fact that high pay remains a reputational risk amid high unrest and political scrutiny.
Scha said that companies that publish their annual reports early tend to be the biggest global players.
With large global operations, the US sector or aggressive American rivals, FTSE 100 companies face the greatest pressure to match US wage levels.
The shareholder revolt has historically constrained the UK board, but recently the tone has changed from investors willing to engage on a case-by-case basis.
“It’s not about giving businesses blank checks, it means investor sentiment is more open to pay reviews,” Shah said. “If the rationale is strong enough, companies will get a good vote.”
More FTSE 100 companies are pushing for higher wages, thanks to recent victories at London Stock Exchange Group and Smith & nephew, which secured shareholder support for an increase in executive pay of millions of pounds last year.
The British-American Tobacco and Compass Group are both among the top 15 companies in the London Stock Exchange’s market value and are the latest to propose a higher wage package for the CEO.
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With the discarding of the UK’s EU bonus cap, banks such as Barclays, HSBC and Standard Charter have sought shareholder approval for greater payments to CEOs who have achieved their performance targets.
Investors and advisors said they are facing demands that companies pay more to managers below the CEO to attract and retain people.
The median FTSE 100 CEO package for 2024 increased by 7%. This increased from £4.49 million in 2023 to £4,79 million last year, Deloitte data shows.
