Debate over executive pay in the UK will be further piqued with news this week that pay deals for top CEOs in the US are soaring.

Figures from ISS Corporate, a branch of the proxy advisory firm Institutional Shareholder Services, reveal that median pay for S&P 500 chief executives has risen by 9% to $15.7m.

Campaigners for higher pay levels in the UK have argued that companies lose out on top talent as executives seek higher rewards in the US.

ISS Coprorate figures also say that 239 CEOs in the S&P 500 have seen their pay rise. CEO pay decreased at 92 companies. ISS Corporate says at 50.2% of companies TSR for the year was lower than the change in pay.

Last week, the AGM of London Stock Exchange Group confirmed new pay for CEO David Schwimmer, lifting his pay from around £6m to £13m.

According to professional services firm Deloitte, the median FTSE 100 CEO pay packet increased from £4.32m to £4.5m in 2023, based on analysis of the first 55 companies to publish annual reports for last year.

That came in the same week that research from consulting firm Georgeson confirmed that of the 34 FTSE 350 votes on remuneration reports in the first quarter of this year, none received significant shareholder opposition (‘significant’ considered to be 20% or more).

That would seem to indicate shareholders are behind higher pay deals and, as Georgeson suggests, may indicate a “willingness” to see pay in the context of global standards.

Early days

However, there is still much of the AGM season to play, with some big companies yet to put their remuneration reports before shareholders.

Debate in the UK was triggered last year when London Stock Exchange chief executive Julia Hoggett posted a blog arguing for more competitive rewards.

“We should be encouraging and supporting UK companies to compete for talent on a global basis, so we remain an attractive place for companies to base themselves, stay and grow,” Hoggett wrote.

“The alternative is we continue standing idly by as our biggest exports become skills, talent, tax revenue and the companies that generate it.”

Hoggett’s pay claim was couple with a campaign through a lobby group, the Capital Markets Industry Taskforce (CMIT), to reduce the burden of UK corporate governance.

One of the arguments was to do away with posting shareholders’ votes in opposition or more to the Public Register managed by the Investment Association.

Not everyone is convinced by the need for higher pay levels. The High Pay Centre has called the demand for bigger pay packets “tone deaf”. Since then, City grandee Paul Drechsler wrote for Board Agenda that arguments for higher pay “often lack merit” while the US “does not provide an effective benchmark”.

Elsewhere, London School of Economics pay expert Sandy Pepper has called the claim for more pay “magical thinking”, saying the argument confuses “cause and effect”.

The pay debate will rumble on. But the latest US figures will likely stiffen the resolve of those seeking bigger rewards.