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High pay in the pandemic year

There was only a muted media reaction this year to the High Pay Centre’s annual review of FTSE100 chief executives’ “pay”. The normal cues for righteous indignation were missing: the median for 2020 of £2.69m was 17 per cent less than the £3.25m reported for 2019. That’s the lowest it’s been since 2009 and hardly the stuff of headlines.

A fall in pay was to be expected in the year of lockdown and suppressed business activity. Several chief executives volunteered to take temporary salary cuts, and 36 per cent of FTSE100 companies paid no annual bonus. As ever, the largest contributor was the long-term share award. These are counted not when they are made, but at the end of their performance period, which is typically after three years. Only then can the outcome of the performance conditions be known, and in 2020, more failed to pass their threshold. Of the 77 per cent of companies whose plans did trigger, a lower proportion of shares was transferred to executives, and lower share prices also had an impact. At Shell (RDSB), fears that oil company shares would become stranded assets knocked 30 per cent off the value that Ben van Beurden’s vested shares had been worth when they were awarded. And Bernard Looney at BP (BP) fared even worse – the value of his fell by 40 per cent.

The High Pay Centre’s “Pay” Review is a bit of a misnomer: it’s not based on chief executives’ current pay packages, but on what they receive. The time-shift involved in long-term share plans means that last year’s outcomes will be governed by historic decisions – the amounts received depend on the number of shares awarded three years earlier; how stringent their performance conditions have proved to be; and whether or not the stock-market in general has risen since they were awarded. So, whilst the review could be said to indicate pay trends, they are not necessarily current ones.

The figures are also flattered by sample-shift: every quarter, the smaller FTSE 100 companies whose market value has fallen are replaced by others whose value has overtaken them – about a tenth of the FTSE 100 companies change every year. Not all companies pay in sterling; and 24 have financial years that end in the first quarter, which in 2020 was before the lockdown began. Experian, for example, ends its financial year on 31 March, so most of the £10.8m reported for its chief executive in 2020 related to 2019. According to its 2021 annual report, during the rest of 2020 and early 2021, he received £7.6m.

The turnover of chief executives themselves also has a significant influence – about a fifth of FTSE100 companies had a new chief executive in 2020. Those new to the role will often appear to receive less than those they are replacing. It’s that time-shift again: the first lump of shares awarded after they start will play no part in the reported “single figure of remuneration” until three years later, when some of the shares are likely to be transferred to them. Bernard Looney, who was promoted from within BP to become chief executive in February 2020, received £2m during the year; in each of the previous three years, Bob Dudley, his predecessor, had received over £10m. For external recruits, it can work the other way round. The performance conditions were not met for the Reckitt Benckiser’s long-term share award that vested in 2020, and its executives received nothing. But Laxman Narasimhan’s buyout awards became due. These substituted for those he had sacrificed after resigning from PepsiCo and joining RB as chief executive in September 2019. Their estimated value of £3.87m lifted the total he received in 2020 to £9.24m.

The table below lists the FTSE100 chief executives who received the largest amounts in 2020. Only one chief executive received £15m - at least 10 Premier League footballers earn more. Further down the ranking, 64 chief executives received less in 2020 than in 2019, and nine received less than £1m. But even so, as the review takes pains to point out, the median of £2.69m was still 86 times the £31,461 that the average UK full time worker earned in 2020. The review also notes that pay tends to be higher in private equity and in some businesses operating in Britain but whose parent companies are listed in other countries. Both are more secretive about pay than those listed on the London Stock Exchange. Until all large companies are required to disclose similar information, we’ll only ever see part of the whole picture.

Chief Executive in 2020


2020 (£m)

Pascal Soriot



Brian Cassin



Albert Manifold



Laxman Narasimhan

Reckitt Benckiser Group


Rob Perrins

Berkeley Group


Mark Cutifani

Anglo American


Peter Jackson

Flutter Entertainment


Jean-Sebastien Jacques

Rio Tinto Group


Emma Walmsley



Tim Steiner