Market Loop - FTSE 100 CEO pay bounces back

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31st May 2022

Bite-sized business news from the UK and beyond

Good morning Yesterday contestants for the new series of Love Island were revealed ahead of the launch next Monday. The show has become a springboard for dozens of social media influencers over the years and now MPs will be reviewing pay standards in the industry due to reports of inconsistent pay rates and evidence of a racial pay gap. The influencer marketing industry is estimated to grow from $6bn in 2020 to $24bn by 2025.

Today's stories

FTSE 100 CEO pay bounces back
Morrisons takeover of McColl’s under competition review

PAY
FTSE 100 CEO pay bounces back

What happened?
Pay for FTSE 100 chief executives rebounded to pre-pandemic levels to a median of £3.6m, according to a Deloitte report published yesterday. The research found that the average CEO package reached £3.6m in the year to March 2022 as pandemic-era pay restraint was reversed by company boards.

2020 was a (relatively) poor year for CEO pay
Median FTSE 100 CEO total pay had been falling for four years before Covid hit. In 2020 it reached £2.8m as bosses took voluntary pay-cuts and were under pressure from shareholders to deal with the financial uncertainty caused by the pandemic. But 2021 saw a revival in big bonuses as the effects of Covid started to wear off.

CEO pay versus the average worker is always a major talking point
Between 2019 and 2021average FTSE 100 jumped 9% compared to the median British worker’s salary which increased by 5%. This means the gap between CEO and worker pay has widened after falling during the pandemic. Deloitte found that bosses made an average of 81 times more than the average employee, compared to 59 times in 2020 and 75 times in 2019.

Across the pond CEO salaries are even higher
In the past year, the average boss in the S&P 500 index of leading US companies received $14.7m in 2021 - 283 times more than the average employee and 183 times the average manager.

But 2022 could see more pressure for equitable pay
With a cost of living crisis and an uncertain geopolitical environment, the year ahead could be more challenging. Shareholders have to approve executive pay packages and could hold companies to account where performance doesn’t align with pay outs or where CEOs are seen to be out of line from the wider employee experience.

Other stories to keep you in the loop

Average UK house price tops £250,000 but ‘market starting to slow’
EU bans most Russian oil imports to 'stop Putin's war machine'
Six million homes could face winter power cuts due to energy shortages
Pasta, bread and crisps among biggest UK budget food price increases
World's top graduates get new UK visa option
Online fashion retailer Missguided calls in administrators

RETAIL
Morrisons takeover of McColl’s under competition review

What happened?
Yesterday the Competition and Markets Authority (CMA) launched an investigation into Morrisons supermarket takeover of convenience retailer McColl’s.

How did we get here?
Earlier this month McColl’s went bust and Morrisons beat EG Group, the owner of Asda, in the battle to buy the failed retailer. Morrisons and McColl's have been partners for five years with McColl's operating hundreds of convenience shops under the Morrisons Daily brand. Morrisons claimed its rescue proposal for McColl's would secure the future of the majority of its shops and workers.

The company has over 1,100 stores across the UK and employs 16,000 people. Like many retailers, McColl’s was hit hard by the pandemic, suffering from supply chain issues, inflation and with a heavy £170m debt burden, it simply ran out of cash.

The CMA is concerned that a tie up could be bad for retail competition and lead to poor consumer outcomes
This means that while the review is underway, Morrisons and McColl’s can’t integrate their operations and have to do business in a competitive way. If not, they could face hefty fines. It’s not clear when the CMA will reach a decision but these sorts of investigations can take months to play out.

For example, Facebook owner Meta is still fighting a CMA ruling over its $400m takeover of animated image maker Giphy, two years after the deal was first announced.

Stat of the day

Tom Cruise's "Top Gun: Maverick" had an opening box office weekend of $124m in ticket sales, giving the actor his first $100m opening in his career

Interesting links from around the web

How Euan Blair became three times richer than his former prime minister dad Tony
Inside the lives of private chefs in Silicon Valley, making six figures and flying private
The Google feature that lets you use images to help you search for things you can’t quite describe

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Market Loop - FTSE 100 CEO pay bounces back

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