What Do CEOs REALLY Earn in the UK?
There’s been a lot of discussion lately about executive earnings. Reports of eight-figure CEO salaries make headlines, yet when you search for figures on average pay for company leaders, the numbers are much smaller. Truth is, there’s a huge gap between the official salaries CEOs say they get and what they really make.
We gathered anonymized salary data on thousands of Experteer members in the UK who head up companies big and small. The average annual salary they reported in 2016 was £113,770. This tracks with general industry data, too, which shows the average CEO salary at £94,884.
Based on Experteer member data, Financial Services and Life Sciences are the industries with the highest average pay rate for leaders, while those in medicine and health fields earn the least. There’s also a significant difference between the salaries of CEOs at large companies and those of small- and mid-sized firm CEOs. Big company leaders earn on average 42 percent more (£133,500) than their counterparts in smaller companies (£94,000).
While all these salary figures seem pretty reasonable for someone who is responsible for running an organization, they are nothing compared to what CEO compensation really looks like. Check out what the average current FTSE100 CEO makes: £5.5 million. That number keeps climbing every year.
Nowadays, a CEO makes more in a few days than the average UK worker earns in a whole year. Research shows that the median annual earnings of a FTSE 350 CEO has jumped a whopping 232 percent since 2000. Last year alone, FTSE 100 CEO compensation went up 10 percent. At the same time, the average UK worker’s wages rose only two percent.
Where’s the Gap?
Why do company leaders really earn so much more than the official salary data shows? The answer lies in the compensation package – all those “extras” a CEO gets to add on top of the base salary. Together they are often worth much more than the salary itself.
Share options are usually the biggest piece of these extra benefits. In publicly-traded companies, these are options to buy stock in a company at a discounted or fixed price. In private firms, they are shares in the company that hopefully increase in value as the company grows. In many cases, these options are worth 500 percent of the annual salary — at an average salary of £113,770, that could be as much as £568,500. Share options that are part of long-term incentive plans are worth less, but, at around 150 percent of the annual salary, not bad either.
Bonuses are also common incentives for leaders. Nine out of 10 FTSE 350 CEOs get one, and they can be valued at half or more of the official salary. Cushy pension contributions (worth considerably more than the average for UK workers) round out the generous perks that many company heads enjoy.
The Big Time
Of course, there are large differences among CEO earnings. Heads of small, privately-owned firms are likely to earn much less than the eye-popping numbers in the examples we give here. But no matter what, CEOs take home a lot more at the end of the year than anyone else, and their compensation packages are the reason.
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Kate Rodriguez is a freelance marketing copywriter based in Munich. She has over 20 years of professional experience in public and private organizations. A former international trade analyst for the U.S. government, she also worked as a university career coach, specializing in international career search. Most recently, she was employed at Experteer as a customer service agent and online marketing manager.