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US-UK chief executive pay gap widens as FTSE bosses sweat over attracting top talent

Some in the City, particularly those within international groups, argue that they face an uphill battle recruiting executives due to the hefty salaries made in the US.
Some in the City, particularly those within international groups, argue that they face an uphill battle recruiting executives due to the hefty salaries made in the US.

The pay gulf between blue-chip chief executives in the UK and US widened even further last year, new figures show, as a debate rages in the City over London-listed firms’ ability to attract and retain top talent.

Median pay for FTSE 100 CEOs was £4.1m last year, up just 0.5 per cent or roughly £20,000 from 2022, according to analysis by Willis Towers Watson for the Financial Times.

Meanwhile, data from proxy adviser Institutional Shareholder Services (ISS) shows average CEO pay in the US rose at its fastest pace in 14 years in 2023, with S&P 500 bosses paid a median of nearly $16m (£12.6m).

The numbers underscore arguments from City bosses, particularly those within international groups, that they face an uphill battle recruiting executives due to the hefty salaries made in the US.

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Some have criticised investors and proxy advisers for taking what they consider a restrictive approach to boardroom pay.

The chair of the FTSE 100’s biggest firm Astrazeneca said last year the he was prepared to endure “major criticism” over the pay of the drugmaker’s CEO Pascal Soriot, which this year rose to £18.7m from £16.9m.

Other FTSE 100 firms to see pay rises approved for their CEOs this year include Smith & Nephew and London Stock Exchange Group, despite pushback from proxy agencies and shareholders.

The pay gap between both sides of the Atlantic is not simply explained by the US’ biggest companies being larger than their UK counterparts. The former CEO of FTSE 100 industrial conglomerate Smiths Group is set to roughly double his pay package this year after quitting to take the same position at a US firm half the size.

Despite having roughly similar revenues, Shell’s CEO Wael Sawan was paid £7.9m in 2023, while Exxonmobil’s Darren Woods took home $36.9m (£29.9m).

The analysis for the FT reflects executives’ total remuneration, including bonuses and share awards. It is based on the 90 per cent of companies that have reported their figures for financial years ended since September 2023.