FTSE chief executives' median pay 'down almost 20%'

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Sir Martin Sorrell, chief executive of advertising agency WPP, has often been the target of shareholder criticism over his pay packet

The median pay for chief executives of FTSE 100 companies has fallen by almost 20% over the past year, according to accountancy firm Deloitte.

Median pay - a figure representing the pay rate half way between the lowest and highest paid executive - dropped from £4.3m in 2016 to £3.5m this year.

Deloitte said policies introduced to limit bosses' pay appeared to be working.

This year's annual general meetings were "calmer than expected" it said.

"The fall in executive pay demonstrates that remuneration committees are making a real effort to address shareholder concerns," said Stephen Cahill, vice chairman at Deloitte.

"This is the first cycle where the legislation introduced in 2013 and primarily voted on during the 2014 AGMs will have taken effect.

"It seems the current legislation is working."

'One off'

The accountancy firm's remuneration report also said there had been a reduction in bosses' bonuses and pension allowances for new appointees.

The report tallies with recently published research from the High Pay Centre which suggested the average pay of FTSE bosses had fallen 17% this year.

But the director of the High Pay Centre, Stefan Stern, suggested public pressure had led to what may turn out to be a "one off" fall in pay, and that this year average executive pay had been skewed by high-profile pay cuts for one or two individuals.

New rules in 2013 obliged firms to provide greater transparency over the pay of their top executives in relation to other employees and to hold a binding shareholder vote on pay every three years.

However, discontent over high executive pay has continued.

Prime Minister Theresa May has promised further reforms to policies governing remuneration, to tackle what she called an "irrational, unhealthy and growing gap" between what bosses and workers are paid.

This year the High Pay Centre said the average pay ratio between FTSE 100 bosses and the average pay package of their employees has fallen to 129:1 - meaning that for every £1 the average employee is paid, their chief executive gets £129.

In 2015 the ratio was 148:1.

Investor criticism at AGMs this spring was more muted than expected.

Deloitte's vice chairman said he did not believe further intervention was necessary.

"With many companies renewing their policies this year we are seeing further moves to incorporate the best practice provisions shareholders now expect," said Mr Cahill.

"The current framework is working well and we do not believe further regulation is needed to move things forward."

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