Chief executives of FTSE 100 companies have seen their pay rise by nearly 20% over the past year, reflecting intensified competition for talent in a global market dominated by large U.S. executive remuneration packages. According to an analysis of annual reports from 55 major British-listed firms, executive compensation has increased by 64% since 2021, with the average chief executive package climbing from £3.59 million to £5.89 million.

The upward trend comes amid evolving investor attitudes, with greater acceptance of share-based incentives, though practices remain more conservative in the UK compared to the United States. While some American CEOs are positioned to earn extraordinarily large payouts—Tesla’s Elon Musk could potentially receive up to $1 trillion if certain targets are met, and Alphabet’s Sundar Pichai may earn as much as $692 million over the next three years—British companies have yet to follow suit in issuing such “one-off moonshot awards,” according to a partner in executive remuneration at a leading professional services firm.

In addition to increased pay, many FTSE 100 companies have scaled back the role of environmental, social, and governance (ESG) factors in their executive incentive schemes. The analysis found that 20 firms have reduced the weighting of ESG metrics in their pay plans, and 11 have eliminated one or more ESG criteria altogether. Notable examples include HSBC and Standard Chartered, which have revised executive target frameworks, while investment manager Schroders removed sustainability measures from its long-term incentive plans. Energy giant BP has simplified its annual bonus structure by excluding emissions targets, and specialty chemicals company Croda International has similarly lowered the emphasis on sustainability metrics.

These moves reflect a broader shift among boards toward more rigorous evaluation of ESG-related pay awards, focusing on relevance and alignment with overall business performance. The recalibration comes amid an increasingly complex geopolitical environment, where factors such as regulatory changes in the United States—particularly under the previous administration—are influencing how companies approach diversity and environmental objectives within compensation policies.

Overall, this dual trend of rising executive pay and reduced emphasis on ESG targets highlights the balancing act that UK companies face in attracting and retaining leadership talent while responding to evolving stakeholder expectations and global political pressures.