FTSE 100 bosses were given a 16 per cent pay rise on average last year, catapulting their earnings to 118 times that of the median UK worker and widening the income gap between executives and ordinary staff.
Bosses on the blue-chip index were paid a median £3.91mn each, a £530,000 rise from the previous year, according to an annual study by the High Pay Centre think-tank.
The figures come after the government and Bank of England called on employers to show restraint when handing out pay rises as they battle high inflation.
Last year workers on average suffered a real terms pay cut, with inflation outstripping wage rises.
The median FTSE 100 boss was paid 118 times the median full-time worker in the UK in 2022, compared with 108 times in 2021 and 79 times in 2020, the study found.
But the jump in executive pay comes against a backdrop of calls in the City of London for board remuneration to be raised further to help the UK to compete with other countries, particularly the US.
Chief executives of companies on the US S&P 500 index are paid far more than their UK counterparts, receiving a median of $14.1mn in 2022, according to an annual study published this month by labour union federation AFL-CIO.
Julia Hoggett, head of the London Stock Exchange, said in May that UK executives should be paid more if the country wants to retain talent and deter companies from moving overseas.
However, Gary Smith, general secretary of the GMB union, criticised surging “fat cat CEO pay” as “workers in sectors across the board were forced on to picket lines to make ends meet”.
He added: “If ministers genuinely think high wages are going to cause spiralling inflation, they probably need to think about curbing pay at the top of the tree, rather than everyone else.”
AstraZeneca’s Pascal Soriot was the best-paid FTSE chief, receiving a total package of £15.3mn. BAE Systems’ Charles Woodburn, and BP’s Bernard Looney were paid more than £10mn each, as was Albert Manifold, boss of CRH, which is moving its listing to the US.
The study covers chief executives’ entire pay packages, including salary, bonuses, pension benefits and shares vesting under incentive plans.
Base salary typically accounts for a minority of FTSE chiefs’ pay with a significant proportion consisting of performance-related bonuses and share awards, the value of which increases if the shares price rises. AstraZeneca’s share price has risen about 80 per cent in the past five years, for example.
The median pay for bosses on the mid-cap FTSE 250 grew more modestly than on the FTSE 100 — rising by £50,000 to £1.77mn, according to High Pay Centre.
Prime Minister Rishi Sunak has previously called for “more moderation” in pay talks between workers and employers while Bank of England governor Andrew Bailey has warned against “unsustainable” increases as he attempts to rein in inflation.
Downing Street on Monday said: “We don’t tell private companies how to set their own wages. It is for shareholders to hold these companies to account.
“Anyone paid high salaries will be expected to justify them, especially at a time when others are struggling.”
The Labour party refused to comment on the inflation-busting pay rises. Labour has previously spoken out about rampant executive pay, but leader Sir Keir Starmer is seeking to keep business leaders on side as part of his attempt to reassure voters that he would pursue economically credible policies.