The pay gap between the U.S. and the U.K. has long been a hot topic.
The two countries—rivals in some ways, allies in others—have only seen the gulf in how they compensate their C-suite executives widen in recent years, which doesn’t bode too well for Britain’s allure as a financial hub.
To get a sense of how steep the gap is, just look at the salaries of CEOs of energy majors in the U.S. and U.K.
America’s Exxon Mobil, ranked third among Fortune 500 companies with revenue of $344.6 billion in 2023, paid its chief, Darren Woods, about $37 million last year, according to the company’s regulatory filings Thursday. The figure includes salary, stock options, and a bonus for 2023, when Exxon Mobil beat profit expectations. Woods’ pay was up $1 million from a year earlier.
He was paid slightly higher than Mike Wirth, CEO of Chevron, another U.S.-based oil major, who received $26.5 million.
Meanwhile, both of the American chiefs’ counterparts across the Atlantic didn’t have as bountiful a year.
London-based Shell, which is the top company on the Fortune 500 Europe list and made $317 billion in revenue, paid its chief, Wael Sawan,£7.9 million ($10 million) for 2023. Murray Auchincloss at rival BP, another oil behemoth, made a similar figure after taking over as CEO in September.
Of note, oil companies’ earnings have spiked in the past two years following Russia’s invasion of Ukraine, which threatened an energy crisis. Yet there’s a deep disparity in pay given that the combined compensation of the above U.S. CEOs is almost three times that of the U.K.-based chiefs.
While these oil companies’ revenues are comparable, their market caps are spaced out. For instance, Exxon Mobil’s market value is $483 billion, while Shell’s is about $238 billion.
But the data underscores concerns about noncompetitive pay for high-level executives in Britain, which can deter it from being a global business player. Between 2018 and 2022, S&P 500 chiefs’ median pay has increased 23%, while that of FTSE 100 CEOs has risen by only 1.1%, corporate governance advisor ISS Corporate found last year.
A confluence of reasons drive the pay disparity, according to a Wall Street Journal report. The U.S. markets have a strong presence of growth-focused companies in tech, retail, energy, and more. These companies have helped expand profits through the years, leading to stronger pay for their American CEOs. In the U.K., on the other hand, listed companies tend to be from traditional industries like banking and pharmaceuticals, which haven’t seen nearly as much growth as, say, Big Tech in America. Other factors like slower economic growth, exchange rate volatilities and higher pay scrutiny in the U.K. add to the long list of barriers.
Prominent figures in the Square Mile have sounded the alarm on how the pay disparity could affect it.
London Stock Exchange CEO Julia Hoggett said on a Bloomberg podcast last year that lower executive pay meant the U.K. had “hamstrung ourselves from creating a level playing field with which to compete with the rest of the world.
“We’ve got to have a conscious understanding of the potential impact that [executive pay] has on the ability to create globally consequential companies,” Hoggett added. Previously, she’s also urged British companies to compete on a global scale for talent to retain its attractiveness as a financial destination.
A slew of London-listed companies have either moved to New York or are considering it, including Shell.
So London has a lot at stake if the trend of low CEO pay and departing listings doesn’t reverse. If not, the chasm with the U.S. and its financial hub will continue to grow.
