The High Pay Centre, a think tank, said shareholders were still backing high executive pay deals despite new powers to vote them down at annual meetings, the BBC reports.

The pay of the average FTSE 100 chief executive increased from £4.1m to £4.7m last year, said the report.

The government should take action to close the pay gap, it said.

In October, new rules came into effect forcing listed firms to give shareholders a binding vote on directors’ pay.

A firm’s remuneration policy now requires the approval of more than 50% of shareholders for a policy to pass.

Business Secretary Vince Cable introduced the shift to make a “clearer link between pay and performance”.

The High Pay Centre’s report says that, without further action, trust in business will be damaged by the perception that an executive “elite” is reaping all the rewards from economic growth.