Executive remuneration across the UK’s largest listed companies has risen sharply following changes to Investment Association (IA) rules and the removal of the bankers’ bonus cap, according to Mercer.
The firm found that FTSE 350 companies have boosted the potential value of both annual bonuses and long-term incentive awards, bringing executive packages closer in line with those offered by US peers.
The analysis, detailed in the ‘UK Mercer 2025 Board Remuneration Handbook’, highlights how UK firms are competing in a global market where regulatory changes have enabled more flexible approaches to reward.
The study found the median total single figure of pay has increased by around 18 percent for chief executives (CEO) and 17 percent for chief financial officers (CFO) across FTSE 350 companies, compared with last year. Mercer said this rise was “partly the result of higher annual bonus payments”, which have increased from the levels seen in 2022 and 2023.
The analysis also reveals progress on gender diversity among senior executives in the UK’s largest firms. The proportion of FTSE 100 CFOs who are female has increased from around a quarter last year to around a third this year. However, there has been little change for FTSE 250 CFOs, and the percentage of female CEOs remains unchanged.
In terms of remuneration, female CEOs at FTSE 350 companies now earn around 11 percent more than male CEOs, compared to around 32 percent less last year. For CFOs, female executives earn around 27 percent more than male CFOs, up from around 9 percent more last year.
Nic Stratford, UK executive reward partner at Mercer, said: “We are seeing progress in female representation at the most senior executive levels but there remains a gap. More promisingly, female executives who do reach the Board are now being paid at least as much as men.
“Executive compensation is under intense pressure, with strong global competition for talent. As businesses adapt to attract and keep the best executives, we have seen sharp increases in salaries and incentive awards this year. This shift has been enabled by investors allowing the largest and most international companies more flexibility to tailor executive pay to their needs. This flexibility is welcome, but not all companies can benefit from it. There is a risk that we will end up with a two-speed world where different standards apply to different types of companies.”
