CEO salaries – UK trends and statistics for 2024

What do you think of when you hear ‘CEO’? Likely, it’s an Elon Musk-type figure, barking orders across a desk and awarding themselves the highest salary band for their effort.

From Logan Roy to Mr. Burns, we’re taught from an early age that CEOs, or Chief Executive Officers, are ‘fat cats’ who would rather plump up their own payslip than an employee’s. That perception has been reinforced by a growing pay divide between staff and bosses in 2024.

But while there are doubtless some bad actors, the full picture is more nuanced. Many CEOs forgo paying themselves for years to fund business growth and expansion. Some never take a salary, opting entirely for fairer, performance-based compensation.

This guide will go beyond the caricature to examine how much today’s CEOs are paid, and how their income compares to the average worker.

Which UK CEOs earned the most last year?

Employee pay in the UK has been steadily increasing since 2022 as organisations try to keep pace with rising inflation. Still, their paydays pale in comparison to the big bosses.

Median pay for CEOs at the UK’s 100 largest listed firms (known as the FTSE 100) was £4.19m in 2023, according to the High Pay Centre think tank, a rise of 2% year-on-year.

Those figures mean the average FTSE CEO in 2024 took home the median UK worker salary’s in just three days. Here’s a closer look at five of the highest-paid UK-based business execs last year, as reported by the High Pay Centre:

1. Denise Coates, CEO of Bet365, paid herself £221 million in 2023. While she is not a FTSE 100 CEO, we have to give a special mention to Coates, who has ranked as the highest-paid Chief Executive in the UK for several years. Coates has now earned £1.4 billion in four years – which is almost equal to the total GDP of the Caribbean island, Antigua and Barbuda.

2. Pascal Soriot, CEO of AstraZeneca, earned £16.85 million in FY 2023-24. That’s around 230 times the amount received by a typical AstraZeneca worker.

3. Erik Engstrom, CEO of RELX, collected £13.64 million in FY 2023-24.

4. Tufan Erginbilgic , CEO of Rolls Royce, earned £13.61 million in FY 2023-24.

5. Charles Woodburn, CEO of BAE Systems, collected £13.45 million in FY 2023-24.

What is the average CEO salary in the UK?

That FTSE 100 CEOs are among the highest earners in the country is not surprising. After all, they manage huge, million-pound corporations and employ thousands across the globe.

However, it’s important not to let the FTSE 100 figures skew perceptions of what CEOs earn. According to the latest Office for National Statistics figures, annual gross pay (including bonuses) for Chief Executive roles is now £97,083 per year, on average.

Broken down, this means a UK CEO would earn £46.67 per hour, on average, over a standard, 37.5-hour work week.

This is a 307.9% increase on the National Living Wage of £11.44 per hour. Statistically, it puts Chief Executives in the top 1% of earners in the UK.

Take note that the ONS data shows a regional disparity when it comes to Chief Exec pay. On average, London CEOs receive a mean gross annual salary of £150,826, while CEOs in the South West (the lowest-paid area) can expect to take home £59,609 a year in comparison.

How much does a CEO earn compared to the average worker?

We know that the average UK employee takes home £34,963 per year, according to ONS data. Assuming CEOs earn £97,083 gross pay per year, they will earn approximately 2.7x the amount of the typical UK employee.

Naturally, this gap is wider in the biggest, most valuable, UK companies. The Companies (Miscellaneous Reporting) Regulations 2018 act mandates that all publicly listed firms with more than 250 UK employees publish payroll software data for CEO wage.

Specifically, reports should contain information on the ‘pay ratio’ in a company; comparing CEO remuneration with the rest of their workforce’s pay.

High Pay Centre analysis of this data shows that FTSE 100 CEOs now take home around 120x the median UK full-time worker salary (compared to 109x in 2021).

The CEO gender pay gap

They may be one of the most visible and experienced people in a company, but Chief Executives are still not immune to the gender pay gap.

In fact, the difference in earnings between men and women in CEO roles in 2023 was a considerable 5.25% (marginally below the national median pay gap of 9.1%). Men in this role earn an estimated £2.17 more per hour than women.

Why do women CEOs earn less than men?

The pay disparity is partly due to women being underrepresented amongst Chief Executives. Just 12% of CEOs in the FTSE 100 were women in 2023 and just 6% of those served as CEO for the entire financial year. In total, their median pay amounted to £2.69m, compared to £4.19m for male CEOs.

Likely, this is caused by the motherhood penalty. The average age of a FTSE 100 CEO is 55 years old, indicating the level of experience required to reach a managing director level.

Research shows that working mothers are more likely to leave work or go part-time to care for children than fathers. Having essentially put their careers on ice, it is much harder for women to build up a CV that will qualify them for a CEO role.

Another path to becoming a CEO is to launch a company yourself. Here, women are also impeded by the gender funding gap. Female founders raise, on average, 7.7x less in early-stage capital than their male counterparts.

Types of compensation for CEOs

You might not guess it from the wealthy individuals we’ve spotlighted above, but most boards aim for “fair” remuneration for CEOs by matching compensation with business performance.

In this way, Chief Executives are encouraged to take risks and chase growth, as their decisions are directly linked to how much they’ll earn at the end of the month.

Here’s a quick rundown of five common types of compensation awarded to CEOs:

• Base salaries – the fixed salary a CEO receives, regardless of yearly performance
• Bonuses – performance-based incentives, often tied to achieving specific goals
• Stocks – public or private shares where, if the value increases, the CEO will profit
• Pension contributions – usually higher than for the rest of the workforce
• Benefits – such as health insurance, gym memberships, or company cars

As an example of how these different forms of compensation can influence income, let’s take a closer look at the salary awarded to Murray Auchincloss, the new CEO of BP. In total, Auchincloss received £8 million in 2023. According to a report by the BBC, that comprised of:

• £1 million in salary payments
• £1.8 million in bonuses
• £4.6 million in share-based rewards
• Around £200,000 in benefits (security, healthcare, and pension contributions)

All in all, just 12.5% of Auchincloss’ personal income came from his actual contracted salary.

How much should a CEO earn in the UK?

At first glance, an annual gross income of £97,083 doesn’t sound like much for the standard CEO. On this wage, a Chief Exec would not even pay the highest additional UK tax rate (although they would need to pay the highest National Insurance rates).

Still, this number is likely skewed by the entrepreneurs who, rather than eat into company cash flow, choose to reinvest their salary into marketing, development, or hiring.

Once they hit the break-even point, founders can afford to start drawing from their company’s cash flow. But even then, deciding how to pay yourself as a business owner requires consideration about future objectives, tax requirements, and personal budget.

Determining CEO compensation is a collaborative effort between the CEO and the board. It’s about balancing future objectives with personal financial needs.

However, as the chasm between executive pay and average worker salaries widens, calculations must consider the optics of reward versus reputation. A FTSE faux-pas, where CEOs feast and employees struggle, will quickly sour public perception.