The UK is fixated on executive pay. Is it the evil some perceive it to be or does it just need a re-boot?

A recent article by the City Editor of CityAM* suggests that the UK is over-fixated on executive pay. That comment brought to mind the view of the London Stock Exchange CEO that higher CEO pay to improve the competitiveness of the UK in the global war for talent.

The City AM piece referenced the High Pay Centre’s observation that average UK FTSE 100 CEO pay is 122 times the average full-time UK worker’s pay, noting that in the S&P 500 the multiple is 285. The article also pointed out that UK CEO tenure lags the US experience; 5 to 6 years on average in the FTSE 100 compared to 8.9 years in the S&P 500.

The issue of tenure is interesting. Why are UK companies not retaining their CEOs for longer periods? It is likely that there are numerous reasons, which might include:

• Investors dissatisfied with performance or links between pay and performance
• Executives dissatisfied with their pay
• A better offer.

Executive packages have fallen into a standard, arguably tired, model and, particularly in the FTSE 100, there is little to differentiate one from another. Performance measures and targets taken from the income statement dominate the annual bonus landscape. Long-term incentives focus on (principally, shareholder) returns and EPS.

That said, in general UK productivity is not racing ahead.

To encourage and reward increased productivity, incentives would need to be focused transparently on the drivers of growth and not the results of it. Moreover, productivity growth requires the integrated, co-operative action of both management and workforce working together.

A recipe for higher levels of productivity is likely to include leadership behaviours, organisational culture, governance framework, remuneration and investment. MM&K provides independent insight and advice for Boards and leadership teams on organisational culture. We help organisations purposely evolve culture to support strategy, improve performance, and align with remuneration and governance structures.

The CityAM article referred to above also brought to mind conversations within MM&K over the years postulating that executive pay is not the problem but, conversely, the levels and structures of workforce pay are of greater concern. An argument (or, perhaps reason) for not focusing on the workforce as a body has been that a significant pay increase across the workforce would be expensive and negatively affect profits. If, however, leadership behaviours, organisational culture and governance framework were embedded across the whole enterprise and incentives were focused on improving productivity, the opportunity should exist to design self-financing incentives for both management and the workforce.

If you would be interested in following-up, please contact paul.norris@mm-k.com in the first instance.

*Acknowledgement: “Time to get relaxed about executive pay” by Simon Hunt, City Editor CityAM 10 December 2025

Back to News