Performance-related pay gets stronger grip on FTSE 100 companies
6 May 2014
Stronger links between pay and performance are being made at the UK’s top companies as recognition grows of “a massive disconnect between how we pay and what we do”, PricewaterhouseCoopers reward partner Fiona Camenzuli has told executive recruiters.
Tue, 6 May 2014 | By DeeDee DokeStronger links between pay and performance are being made at the UK’s top companies as recognition grows of “a massive disconnect between how we pay and what we do”, PricewaterhouseCoopers reward partner Fiona Camenzuli has told executive recruiters.
Top executives of FTSE 100 companies earn on average between £2.5-6.5m a year, with chief executive officers generally receiving annual pay rises of 2.5-3.5%, PwC’s Camenzuli said in discussing a 2014 early season executive pay review.
However, as businesses wrestle with the ongoing fallout from the global financial crisis, banking scandals, new regulations and shareholder rebellions, 25% of FTSE 100 companies froze their CEOs’ pay in 2012-13.
For newcomers to the top roles in FTSE 100 businesses, the same issues are exerting downward pressure on executive pay and leading to less remuneration than they might have expected previously.
As an example, Camenzuli noted that 70% of new CEOs in FTSE 100 companies were internal recruits, and received 13% less than their predecessors. Overall, all new CEOs in FTSE 100 companies earned 7% less than their predecessors, she said.
Pressure is also being put on senior leaders, who own shares in the businesses they work for, to hold on to their shares for ”much longer” periods than they would have previously to ensure their focus is long term, Camenzuli said.
An ongoing US debate about fairness in business is likely to make itself felt in the UK before long, Camenzuli suggested, which could further heighten attention on executive pay. [Editor’s note: The Chartered Institute of People and Development, the Centre for Performance-led HR at Lancaster University Management School and The Work Foundation last November released a report on ‘The changing contours of fairness: can we match individual and organisational perspectives’.]
Camenzuli spoke to a Recruitment & Employment Confederation (REC) sector group meeting of executive and professional services recruiters last Wednesday (30 April).
Top executives of FTSE 100 companies earn on average between £2.5-6.5m a year, with chief executive officers generally receiving annual pay rises of 2.5-3.5%, PwC’s Camenzuli said in discussing a 2014 early season executive pay review.
However, as businesses wrestle with the ongoing fallout from the global financial crisis, banking scandals, new regulations and shareholder rebellions, 25% of FTSE 100 companies froze their CEOs’ pay in 2012-13.
For newcomers to the top roles in FTSE 100 businesses, the same issues are exerting downward pressure on executive pay and leading to less remuneration than they might have expected previously.
As an example, Camenzuli noted that 70% of new CEOs in FTSE 100 companies were internal recruits, and received 13% less than their predecessors. Overall, all new CEOs in FTSE 100 companies earned 7% less than their predecessors, she said.
Pressure is also being put on senior leaders, who own shares in the businesses they work for, to hold on to their shares for ”much longer” periods than they would have previously to ensure their focus is long term, Camenzuli said.
An ongoing US debate about fairness in business is likely to make itself felt in the UK before long, Camenzuli suggested, which could further heighten attention on executive pay. [Editor’s note: The Chartered Institute of People and Development, the Centre for Performance-led HR at Lancaster University Management School and The Work Foundation last November released a report on ‘The changing contours of fairness: can we match individual and organisational perspectives’.]
Camenzuli spoke to a Recruitment & Employment Confederation (REC) sector group meeting of executive and professional services recruiters last Wednesday (30 April).
