The pay gap between US and UK chief executives continues to widen, with the median pay for S&P 500 CEOs jumping 9% to $15.7 million in the year to April 15. This increase comes despite the underperformance of some US companies last year, according to analysis by ISS-Corporate.
In the UK, FTSE boards are facing pressure to increase CEO pay as executives complain of being underpaid compared to their American counterparts. Median total pay for UK chief executives at the first 55 companies to publish annual reports rose 4% to £4.5 million in 2023. FTSE CEOs were paid a median of £3.91 million in 2022, a £530,000 rise from the previous year.
London Stock Exchange’s David Schwimmer and Peter Harrison, chief executive of FTSE 100 asset manager Schroders, are among those calling for greater pay parity with the US. However, at 65 companies, pay increased even as performance declined, with companies like Hasbro, Southwest Airlines, and Baxter increasing CEO pay despite falling shareholder returns.
As executive pay is often tied to the company’s share price, the overall stock market gains have fattened bonuses. But with investors trimming their expectations of Fed action this year, concerns are rising about companies where executive pay is increasing while shareholder returns are decreasing.
Shareholders are being urged to scrutinize these cases, with experts warning that such discrepancies could be cause for concern. Companies like Baxter have defended their pay increases, citing short-term bonuses tied to stronger business performance. Southwest Airlines declined to comment beyond its regulatory filings.