FTSE 100 chief executives were paid an average of more than £5mn this year, according to analysis from advisory firm WTW. Median total remuneration for the bosses of Britain's biggest listed companies rose to £5.1mn this year, up from £4.6mn previously. The increase follows a shift in attitudes among UK boardrooms and shareholders, who have proved more willing to wave through generous deals in order to avoid losing bosses to America.

Some chief executives were paid more than £10mn this year. Those included Smith & Nephew's chief executive Deepak Nath, whose maximum package rose to $15.3mn, and Rolls-Royce's Tufan Erginbilgiç, whose total package could rise to £18.5mn. Remuneration committees, including at Rolls-Royce, have justified large increases by citing the need to compete with the bumper pay on offer in the US, amid a growing anxiety about the UK's competitiveness.

Companies including Smith & Nephew and BAE Systems have pointed to the need to increase executive pay to prevent poaching by international rivals. Lord Jitesh Gadhia, chair of Rolls-Royce's remuneration committee, this year said "competitive reward arrangements" were "essential to retaining our key talent". WTW said activist investors and shareholder advisers were rebelling less on rising pay than they did several years ago.

ISS, the influential shareholder proxy advisory group, recommended voting against remuneration policies in 15 per cent of cases this year, compared with 28 per cent previously. It added that only eight companies received "against" recommendations from ISS on remuneration resolutions, over 50 per cent fewer than the previous year. Cevian Capital, one of Europe's largest activist investors, in August called for higher pay for non-executive directors in UK boardrooms as part of efforts to halt the decline of the London market.

However, there is a growing pay gap between the largest and smallest FTSE-ranking businesses, with the boss of Whitbread, Dominic Paul, earning £3mn last year for running the £3.94bn company. Paul Townsend, a director at WTW, said that while median CEO pay had risen above £5mn, "the gap between the lowest and highest paid CEOs has widened". This suggested "a growing dichotomy between companies who have felt the need to respond to the global war for talent by improving CEO pay competitiveness, whilst performing most strongly, and those who have not", he said.

WTW's analysis also showed that while environmental, social and governance (ESG) metrics were still used to determine bonus awards, they were typically now wrapped into other measures. It said the use of a standalone diversity, equality and inclusion (DEI) metric had declined by 40 per cent in remuneration policies in the past year. Anna Leach, chief economist at the Institute of Directors, said: "Headline CEO pay figures will inevitably attract scrutiny, but the key question is whether pay is clearly linked to long-term performance, sustainable value creation and the interests of shareholders.".