CEO pay and the workforce

Organisations have long recognised that people are their ‘most important asset’, and the COVID-19 pandemic has highlighted that businesses are intrinsically dependent upon their employees, the environment and wider society. With the rise of environmental, social and governance (ESG) criteria used to assess company performance, businesses and their investors are acknowledging that people are not just an asset, but an important stakeholder too. In fact, the UK Corporate Governance Code explicitly recommends that when considering executive pay, boards must consider people issues such as organisational culture, diversity, wellbeing and reward of the wider workforce.

This report, produced in partnership with the High Pay Centre, explores the extent to which FTSE 100 CEOs are incentivised to invest in and protect the interests of their workforces. It finds that while investors have become increasingly interested in the ESG agenda, this is not reflected in the way these companies incentivise and reward their most senior decision makers. Pay plans are still overwhelmingly weighted towards financial measures of success, with little incentive for CEOs to protect the interests of other stakeholders.    

The aim of the report is to kickstart a conversation with investors, remuneration committees and business leaders, about how best to measure and reward CEO performance against a wider range of stakeholder interests, and reshape executive remuneration accordingly.  

While the research is based on the UK context, the broader implications should be of interest wherever you are based.