UK CEO Pay report 2021

Introduction

This report analyses the pay of FTSE 100 and FTSE 250 CEOs in 2021, as documented in the companies’ own retrospective annual reports for the year.

The FTSE 350 remains an imperfect proxy for top pay across the UK in general. Many of the companies in the index are international operations with limited presence in this country beyond a listing on the London Stock Exchange.

Conversely, there are many major UK employers that are not included in the index, because they are either privately owned or listed by parent companies in other countries. In some respects, the listed companies attract the most analysis (and criticism) because they are subject to the most demanding disclosure requirements and thus data on their pay practices are obtainable. It remains the High Pay Centre and TUC view that all large employers should be required to provide more information about the pay of their senior managers and that of their wider workforce, as well as their working practices more generally.

Despite these limitations, the index contains many of the UK’s biggest private sector employers across a wide range of sectors, whose pay and employment practices as market leaders have a substantial impact on incomes and living standards throughout the country. The fact that pay levels for FTSE 100 CEOs raced away from the average UK worker between the 1980s and the 2000s, mirroring the widening gap between the super-rich and everybody else over the same period, demonstrates how CEO pay is a useful exemplar of wider societal inequality.

Since last year’s report the economic landscape in the UK and globally has shifted significantly. Lockdowns due to Covid-19 have been fewer and shorter in most countries, thanks to vaccination efforts, enabling most sectors of the economy to recover or resume normal service. However, China’s continued ‘Zero-Covid’ strategy, war in Ukraine, goods shortages, global supply chain issues and rising energy prices have led to inflation and a global cost of living crisis.

These events have shifted the narrative in the UK away from a focus on "building back better" out of COVID 19 and creating a high wage economy. Despite real pay falls, some have argued that pay increases for low and middle earners would exacerbate inflation, while unions have pressed the point that pay increases are even more of a necessity than ever after a sustained period of stagnant wage growth.

If we want to know who is being affected, and how, by the current crises, it is vital to understand how pay is distributed in the UK, including among the highest earners. This helps us to ascertain the role that a more even balance of pay distribution could play in raising living standards.