The think tank’s annual assessment of FTSE 100 CEO pay packages, carried out in conjunction with CIPD, shows that rewards at the top have dropped by almost a fifth, with the average annual rate now £4.5m.

In 2016, the ratio between FTSE 100 CEOs and the average pay package of their employees was 129:1, compared to 148:1 the previous year. However, it would take a UK worker on a salary of £28,000 (median full-time earnings) 160 years to earn what an average FTSE 100 CEO was paid last year.

The survey found that 60 of the FTSE 100 CEOs are paid more than 100 times the typical annual pay of a UK worker. Female CEOs are also disadvantaged, as while they make up 6% of the FTSE 100, they earn only 4% of the total pay.  Male CEOs in the FTSE 100 earned on average £4.7m last year, compared with £2.6m on average for women.

Stefan Stern, director of the High Pay Centre, said: ‘We have finally seen a fall in executive pay this year, in the context of political pressure and in the spotlight of hostile public opinion.

‘This is welcome, but the response has been limited and very late. It is also, so far, a one-off. We need to see continued efforts to restrain and reverse excess at the top.

‘And we should beware the ratcheting up of pay lower down the FTSE league table as CEOs and remuneration committees “chase the median”. This helps nobody but a few lucky top execs.’

The analysis suggests the gap between the highest and lowest FTSE 100 pay packages has closed as companies ‘chase the median’, which currently stands at £3.45m.

The average pay packages of the 25 highest paid CEOs have dropped by 24% to £9.4m in 2016. Conversely, the 32 lowest paid CEOs in the FTSE 100 have seen an increase in their overall package.

The CIPD and High Pay Centre are calling for all publicly listed companies to publish the ratio between the pay of their CEO and median pay in their organisation, within the context of their overall reward strategy. They are also recommending that companies have employee representation on their remuneration committee, and establish a human capital development sub-committee with a wider remit to focus on all aspects of people, culture and organisation to provide better insight and guidance to the board and beyond.

In addition, the CIPD and High Pay Centre want the government to set voluntary human capital reporting standards to encourage all publicly listed organisations to provide better information on how they invest in, lead and manage their workforce for the long-term.

Commenting on the survey findings, Luke Hildyard, policy lead: stewardship and corporate governance at the Pensions and Lifetime Savings Association, said: ‘The extraordinarily high executive pay awards that have become commonplace in recent years were never going to fall to more sensible, proportionate levels overnight, so a small but significant reduction should be viewed positively.

‘Our members will be concerned by the fact that multi-million pound pay packages remain the default arrangements for CEOs, despite an absence of convincing evidence that they are necessary to incentivise or reward good leadership.’

Executive Pay: review of FTSE 100 executive pay packages is here.