The latest analysis of construction industry executive pays has revealed a varied landscape.
- Executive salaries in the sector continue to outperform average worker earnings significantly.
- A notable disparity in pay changes for executives in 2023 reflects wider economic conditions.
- Safety and sustainability metrics are increasingly affecting executive compensations.
- Efforts to address gender pay disparities and improve diversity in leadership remain slow.
The construction sector’s executive pay landscape shows stark contrasts. The median salary for a chief executive in a FTSE 100 company hit £4.19 million in 2023, marking a record high. This trend has not spared the construction industry, where the top executives’ compensation substantially eclipses the average worker’s wages. Despite this, there is growing discontent as many hardworking individuals struggle to meet basic costs like housing and food.
The average pay package for the top 20 construction executives has risen since 2019, although at a slowing pace. It jumped by 30% after a 66% increase between 2020 and 2021, then by 17.5% between 2022 and 2023. This moderation may indicate a levelling-off after the post-pandemic boom. For example, Balfour Beatty’s Leo Quinn experienced a drop in his remuneration package by 17%, yet he remains the highest-paid executive. Meanwhile, Severfield’s Ian Cochrane saw a remarkable increase of 123%.
Executive pay changes are also reflecting on the industry’s focus on sustainability and health and safety. As their importance grows, bonuses and long-term incentives are increasingly linked to these outcomes. However, only 60% of the top 20 industry executives saw a pay rise in 2023 compared to 80% in the previous year. Among the notable changes, Leo Quinn’s overall pay decreased amid efforts to match strategic objectives. In contrast, Galliford Try’s and Morgan Sindall’s leaders saw their packages increase due to strong performances and environmental commitments.
Notably, women remain underrepresented in top executive positions within the construction sector. Helen Willis of Costain was the only woman in the top 20 earners in 2023, but with changes expected in 2024, diversity might start to see improvements. Meanwhile, only 14% of the top executive positions are held by women. There are also broader calls to close the gender pay gap and ensure equitable pay practices across the board.
Safety outcomes continue to play a crucial role in determining executive pay. After two fatalities at Balfour Beatty sites, the remuneration committee exercised its discretion to reduce safety-related bonuses. This approach underlines a shift towards a culture where leadership aims to integrate safety comprehensively into their business operations.
Moreover, the Labour government’s new requirements for large firms could impact wage structures. Introducing mandatory action plans to close gender pay gaps and curb outsourcing might alter wage dynamics in the construction sector. Despite these changes, the scrutiny of executive salaries appears limited under the current administration, leaving significant disparities unaddressed.
The evolving landscape of executive compensation in construction highlights the ongoing challenges of equity, sustainability, and safety.
