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Boardroom bonuses are rising fast. Photograph: Getty Images
Boardroom bonuses are rising fast. Photograph: Getty Images

What cost of living crisis? Bumper executive bonuses make a comeback

This article is more than 1 year old

As staff grapple with rising food and petrol prices, average pay of FTSE 100 bosses has risen to pre-Covid levels

“If that had been our CEO, he would’ve been on the front pages with whiskers painted on him and labelled a greedy fat cat,” remarked the executive, chewing on a roasted scallop in a busy north London restaurant. The diner works at an energy supplier and has just seen the thumping £6.5m handed out to John Pettigrew, boss of National Grid, the privately owned national electricity operator.

Pettigrew’s job in charge of a low-profile, non-customer facing infrastructure business perhaps spared him from scrutiny. But it is AGM season, when executive pay deals are published and put to a vote by shareholders, and there will doubtless be others who become an emblem of corporate largesse as worker discontent deepens in the coming months.

To recap: inflation is at a 40-year high, fuel prices have repeatedly hit record levels and a global recession is a real threat. While the prime minister urges restraint on worker pay, warning of the dangers of a “wage price spiral”, at the top of the pyramid the bonuses are back.

Having shown restraint for two long pandemic years, the average pay of FTSE 100 bosses has sprung to pre-Covid levels. Chief executives were paid £3.62m on average in 2021, rebounding from £2.78m in 2020. Though top pay is still short of the £4.04m high seen in 2017, by July, when the annual meeting season closes, another round of increases will have been waved through.

In spring 2020, and again in 2021, many FTSE executives agreed to take a temporary salary cut, or forego bonuses – either as part of a cost-cutting drive or in solidarity with the public during uncertain times. With so much taxpayer cash helping keep businesses afloat, in the form of furlough wages, government-backed loans and business rates relief, most boards reigned in the remuneration.

Now would not seem the moment to turn the money taps back on. If workers must show restraint, then why not their bosses? But some companies are back to splashing the cash. The Restaurant Group chief Andy Hornby, best known for leading Halifax Bank of Scotland before its state bailout, landed a £578,000 bonus in May, despite a stiff 32% of votes cast against.

The dining firm noted that no bonuses had been paid for two years but campaigners were unimpressed, given the firm took tens of millions in taxpayer support. Meanwhile, the Next chief, Tory peer Lord Wolfson, faced criticism for a hefty £4.4m, his highest payout since 2015.

Ashley Hamilton Claxton, head of responsible investment at Royal London Asset Management, regularly meets pay committee chairs to examine remuneration proposals. She has urged companies to exercise restraint. “We’re encouraging them to hear the mood music and not do anything too outlandish,” she said. “In today’s world with cost of living increases, and inflation, we are definitely encouraging them to be very, very sensitive about the wider market.”

A return to in-person AGMs could also fan the flames of the pay debate. During the last two years, companies have typically held the meetings online, allowing investor questions to be submitted virtually and carefully vetted. This summer has already seen some awkward moments as small shareholders took on boards – green protesters sang and shouted at Shell’s stony-faced directors and this week the chair of Centrica was upbraided by one shareholder who took umbrage with the choice of venue in Leicester.

Pay campaigners probably have 7 July circled in their diaries. That’s the date investors vote on when Sainsbury’s chief executive Simon Roberts’ £3.8m pay package. The payout comes after some of its big investors called for all employees in its stores – including contractors – to be paid a “real living wage” of £9.90 an hour. Meanwhile, shareholder adviser Glass Lewis has urged a vote against the package of Sir Martin Sorrell at S4 Capital. Sorrell became the posterboy for fat cat pay during his time at WPP.

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A major justification for runaway corporate pay is the competition for talent. Amid the “Great Resignation”, executives are being offered tempting packages to stay. Last year, defence giant BAE Systems handed its CEO, Charles Woodburn, a pay rise and a £2m “golden handcuffs” share deal after miner Rio Tinto tried to poach him.

Hamilton Claxton says companies are engaging more with investors before pay plans are laid out; pushing back against proposals linked to simply growing the size of the company and encouraging executives to hold more shares personally. “There’s often not much downside risk in these plans; our fund managers want to see more skin in the game,” she said.

“The word that’s key for investors in the debate on executive pay is alignment,” said Richard Bernstein, head of activist investor Crystal Amber. “The more that a CEO’s bonuses are aligned to increasing the share price the better. I’ve seen cases where bosses are handed a cash lump sum bonus just for doing their job – that’s not on and understandably creates division with employees.”

Bernstein said the solution is to increase the proportion of executives’ pay in shares, and potentially hand employees stock, too. “Ultimately some bosses are in it for the challenge and others for the money,” he said.

Big pay deals

John Pettigrew – National Grid

John Pettigrew. Photograph: Gretchen Ertl/Reuters


The infrastructure boss has just scooped his biggest pay packet since taking charge in 2016 as energy bills soar.
Total annual pay 2021-22 £6.5m (2020: £5.4m)
Pay ratio 105 times more than the average worker
Pays living wage Yes.

Dominic Blakemore – Compass

Dominic Blakemore. Photograph: Compass


The catering giant chief’s pay tripled, bouncing back after taking a salary cut for the first six months of the pandemic. His firm’s subsidiary Chartwells was rebuked by Manchester United footballer and campaigner Marcus Rashford after providing “unacceptable” school meals.
Total annual pay 2020-21 £3.2m (2019-20: £1.2m)
Pay ratio 138 times more than the average worker
Pays living wage Yes, for directly employed and subcontractors where client pays living wage.

Simon Roberts – Sainsbury’s

Simon Roberts. Photograph: Toby Melville/Reuters

The grocery executive has raked in millions but has rejected calls from investors to pay all workers in its store the “real living wage”.
Total annual pay 2021-22 £3.8m (2020-21: £1.3m)
Pay ratio 183 times more than the average worker
Pays living wage Yes for its 171,000 direct employees but not contractors from firms such as Mitie who provide services such as cleaning and security in stores.

Andy Hornby – The Restaurant Group

Andy Hornby. Photograph: Sarah Lee/The Guardian

Hornby was handed £1.2m, including a £578,000 bonus, by the Wagamama owner despite receiving tens of millions in taxpayer support to handle Covid restrictions. Hornby led Halifax Bank of Scotland before it was rescued by taxpayers during the financial crisis.
Total annual pay for 2021 £1.2m (2020: £518,000)
Pay ratio 49 times more than the average worker
Pays living wage Yes, for staff age 23+.

Steve Rowe – Marks & Spencer

Steve Rowe, outgoing CEO of M&S. Photograph: Toby Melville/Reuters

The executive who started his nearly 40-year career on the shopfloor of its Croydon store stepped down last month. But he will continue to be employed as a consultant, collecting up to £843,000 in pay for up to a year. The firm pocketed around £62m in business rates relief during 2021-22.
Total annual pay 2021-22 £2.63m (2020-21: £1.1m)
Pay ratio 117 times more than the average worker
Pays living wage Yes, for staff age 23+.



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