Executives AT Big Firms Get Compensation Increase by 16% While Workers Face Tightening Financial Pressure.

credit: bloomberg

London (Parliament Politic Magazine) – The High Pay Centre revealed that the median compensation for chief executives in the FTSE 100 rose to £3.91 million in 2022, up from £3.38 million in 2021. This comes as a stark contrast to the financial pressure faced by many workers due to escalating prices.

According to the findings, the average pay for a FTSE 100 CEO was 118 times greater than the earnings of a typical UK worker, whose annual salary averages £33,000. While critics condemned these substantial earnings as excessive, some companies defended them by stating they were in alignment with industry competitors.

Top Earners In The UK Business Firms 

The High Pay Centre, an organization that monitors executive remuneration, identified Sir Pascal Soriot, the CEO of AstraZeneca, as the highest paid executive in 2022, earning £15.3 million. AstraZeneca gained significant recognition for its collaboration with Oxford University scientists in developing a Covid-19 vaccine.

Among the top earners, Charles Woodburn from BAE Systems, a security and aerospace company, secured the second position with earnings of £10.7 million. Emma Walmsley, the CEO of GlaxoSmithKline, emerged as the highest-earning woman executive, taking home £8.45 million.

Notably, Ben van Beurden, former CEO of Shell, received £9.7 million, and Bernard Looney of BP received £10 million, both earning spots among the six highest earners. Both energy giants reported record profits attributed to surging energy prices.

Increase In Pays Is Due To Various Factors 

The High Pay Centre’s analysis, which scrutinized the compensation of CEOs across all companies listed on the UK’s FTSE 100 through annual reports for 2022, revealed that median pay increased by over £500,000 compared to 2021. This upward trajectory persisted after a dip to £2.46 million in 2020 during the peak of the pandemic.

The High Pay Centre attributed the increase to a combination of factors, including the post-lockdown economic rebound and substantial incentive-based rewards linked to profitability and stock prices for executives.

Nonetheless, the earnings have not yet regained the heights reached in 2017, when they peaked at £3.97 million. The center also emphasized that the disparity between the compensation of corporate leaders and that of other workers widened further in the past year.

The Trades Union Congress (TUC) characterized the findings as indicative of an imbalanced situation in the UK, describing the nation as a “realm of stark disparities.” Paul Nowak, the TUC’s general secretary, called for an economy that improves living standards for all citizens, not just those in influential positions.

On the other hand, the Adam Smith Institute, an economic think tank, cautioned against reflexive criticism of CEO salaries, suggesting that a more comprehensive examination of their contributions to the broader economy was necessary.

Read More: Significant Plunge in August Asking Prices for UK Residences

Pay Package Of The CEOs Are Represented As A Single Figure 

AstraZeneca, responding to the report, clarified that 12% of Sir Pascal’s compensation was fixed, while the remaining 88% was contingent on share prices and performance. The company highlighted that its share price had surged by 81% over the past five years. Additionally, AstraZeneca pointed out that its CEO’s pay was comparatively lower when compared to major pharmaceutical competitors worldwide.

BP, Shell, and other energy companies have faced criticism for their substantial profits, particularly in a time when soaring energy costs have significantly contributed to the overall increase in the cost of living.

According to Shell’s explanation, the reported £9.7 million figure for Mr. van Beurden includes various components: a £1.42 million salary, a £2.59 million bonus, a £4.9 million Long Term Incentive Payment, along with pension and other taxable benefits.

The company’s spokesperson clarified that its “executive remuneration” is evaluated against a wide array of European multinational firms. They added that data spanning a decade demonstrated that their senior leaders received compensation that was competitive in nature.

While the disclosed pay package for a CEO is often represented as a single figure, it typically encompasses more than just the base salary. It incorporates bonuses, incentives, and pension contributions as well.

The current inflation rate, which reflects the rate at which consumer prices are rising, stands at 6.8% for the year leading up to July. However, throughout the majority of 2022, this figure was considerably higher, peaking at 11.1% in October. This means that, during that period, goods were on average more than 10% pricier compared to the previous year.

Beth Malcolm

Beth Malcolm is Scottish based Journalist at Heriot-Watt University studying French and British Sign Language. She is originally from the north west of England but is living in Edinburgh to complete her studies.