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FTSE 100 CEO Bonuses Rise While Pay Averages £868,000

The bosses of Britain's biggest companies received a bump in bonuses over 2013 with FTSE 100 CEOs raking in £897,000 on average, compared to £865,000 the year before.

According to FIT Remuneration Consultants, the increase in bonuses suggests a stronger correlation between performance and extra rewards as the FTSE 100 index increased by 14.4% over the last year.

"While this may surprise some, the evidence is clear that a typical FTSE 100 executive director's total take home pay reduced last year compared with the year before," said Rob Burdett, a partner at FIT in a statement.

"This shows the lasting impact of the 2012 Shareholders' Spring and the new disclosure rules and voting powers on pay now enjoyed by shareholders."

Meanwhile, FTSE 100 base salaries dipped, albeit very slightly, to average £868,000 (€1.1m, $1.5m), from £870,000 in 2012.

The median salary increase for executive directors has been broadly consistent with staff generally at 2%-3%, added FIT.

In April this year, Britain's business secretary Vince Cable said the average pay for chief executive officers rose by 13% each year between 1998 and 2010, and that rising pay and financial performance is disproportionate.

He subsequently threatened Britain's biggest firms with tougher rules and regulation over executive pay and bonuses for the second time in a month.

"Getting pay wrong damages popular trust in business and undermines the duty to promote the long-term success of the company," said Cable in the letter to FTSE 100 company remuneration committees.

"I therefore think it vitally important that remuneration committees consider how remuneration policies can genuinely support sustainable value creation and avoid creating unwelcome incentives to focus excessively on short-term goals.

"At a time when every part of the economy is striving to get more from less, I hope you find yourselves animated by the same spirit."

However, FIT reiterated on 23 June that FTSE 100 pay and bonuses are now more in line with company performance.

"We are seeing ever more rigour applied to annual bonus and long-term incentive target-setting, with base salary increases generally no higher than inflation," said Burdett.

"While Government will continue to take a keen interest, it is to be hoped they will step back on the basis of these figures and see how companies continue to operate in practice."

"Shareholder support for executive pay resolutions this year has been strong, with around 90% votes in favour typical.

"While this is good news on the face of it, companies will need to balance the need to keep their institutional shareholders happy with the fact that it may be necessary to depart from the tried and tested pay model to truly align an executive team's pay with the organisation's strategic goals, particularly given the renewed pressure from the less regulated and potentially far more lucrative private equity pay market."