L&G hikes bonus cap as boardroom pay soars

Legal & General has become the latest blue-chip firm to raise the cap on how much its boss can earn in a bid to stop chief executives quitting for America where boardroom pay is even higher.

The fund manager plans to raise what Antonio Simoes could make to £8.3 million – nearly triple what he took home last year when some bonus targets were missed.

L&G joins a growing list of FTSE 100 firms to boost how much chief executives can make as they compete in what they say is an increasingly international market for top executives.

The Mail on Sunday’s ‘Fat Cat Files’ show the typical FTSE 100 chief was handed £5.5 million in 2024, the latest year for which figures are available.

That is less than half the £12.2 million paid on average last year to the boss of an S&P 500 firm in the US, according to pay advisory firm ISS Corporate. But the gap is closing as UK-based multinationals race to compete with their transatlantic peers by handing out ever more generous pay packages.

Shell raised Wael Sawan’s remuneration from £6.8 million to £13.8 million last year, but that could double to a potential £20 million if the oil giant’s targets are hit.

Cashing in: Legal & General plans to raise what Antonio Simoes could make to £8.3 million – nearly triple what he took home last year

At Rolls-Royce, Tufan Erginbilgic’s pay could exceed £24 million this year if the engineer’s share price surge continues.

Advertising group WPP, which was demoted from the FTSE 100 index last year, plans to pay new boss Cindy Rose up to £14 million if share price and other performance targets are met.

The bonanza comes despite a surge in protests by shareholders at firms where such awards are deemed excessive. The number of revolts at FTSE 100 firms nearly doubled last year from eight to 15, according to research firm Indigo Governance.

But in a blow for campaigners, the Government recently axed a public list that named and shamed the worst offenders.

It followed pressure from corporate lobbyists who objected to leading firms being put on the ‘naughty step’ over ballooning executive pay, saying it harmed their reputation.

The Government said the move would ‘remove duplication’ as part of a series of ‘pro-growth’ measures to cut red tape for firms and make London more attractive as a financial centre.

L&G said Simoes’s £3.1 million pay last year was ‘below market levels’ noting he ‘accepted a significant reduction in total remuneration’ on leaving Santander two years ago. He received £7 million in compensation from L&G for pay and bonuses forfeited when he left the bank.

L&G’s new plan raises the bonuses he could be paid. A maximum £10.5 million payout would only be made if the share price also rose by 50 per cent.

The policy, which is reviewed every three years, will be voted on by shareholders at their annual meeting next month.

As Britain’s biggest asset manager, L&G actively votes against pay plans of firms it invests in if they do not align with long-term shareholder interests. It recently opposed Elon Musk’s $1 trillion ten-year pay deal at Tesla as it did not require him explicitly to spend any time at the electric car maker.

L&G also tackles other issues. It is a top-ten shareholder in BP, where later this month it will vote against chairman Albert Manifold as he shifts the oil giant away from its green goals.