There are some mitigating factors, of course. The fortunes of our biggest companies – particularly given London's status as a global financial centre – are not directly correlated to the economic health of the UK. So, just because many of us here are seeing below-inflation pay rises, or pay freezes, or even pay cuts, it doesn't necessarily follow that FTSE 100 CEOs should be too. By a similar token, top bosses are hugely in demand; so there's a degree to which UK-listed companies are having to compete for talent in a global market (and in some places – such as the US – bosses can earn a lot more).
Nonetheless, there are clearly some potential issues here. Consultancy MM&K (which co-wrote the report along with governance watchdog Manifest) reckons some remuneration committees are too close to their CEO – so they're not hard-nosed enough about pay. It also reckons that (remarkably, in light of recent years) companies are reducing the length of their long-term incentive schemes – to as little as three years in some cases. Which isn't very long-term, we'd argue. And, more to the point, if the FTSE as a whole was only up 9% over the year, it doesn’t look as though these CEOs are creating as much value for shareholders as these figures might suggest.
Either way, investors are getting antsy. Last week about one-fifth of HSBC shareholders voted against the bank's remuneration plan – a hugely embarrassing rebellion for a company of that size. Tesco also said today that it's revamping its bonus structure, after its investors kicked up a fuss last year. It will now have just one long-term incentive scheme instead of four, with targets based on return on capital invested and earnings per share (as opposed to the share price per se, which it has decided is an inappropriate metric for a company of its size).
On the other hand, Tesco's report also revealed that former CEO Sir Terry Leahy's (pictured) total pay fell from £5.22m to £4.22m in 2010/11 – because of the continuing losses at Fresh & Easy, its US operation, and a market-trailing shareholder return. Now we imagine that Sir Tel wasn't exactly on the breadline as a result. But at least it suggests a decent link between performance and reward – and strengthening this link has to be the goal for all concerned within UK plc.