The average remuneration of a FTSE 100 chief executive fell by 17 per cent in 2016, according to data from the Chartered Institute of Personnel and Development (CIPD).
The data showed the average FTSE 100 boss took collected an annual pay package of £4.5m, down from £5.4m in 2015.
The highest paid FTSE 100 chief executive was Sir Martin Sorrell, who runs advertising and marketing conglomerate WPP, whose pay package dropped from £70.4m to £48.1m.
According to the authors of the report there may be a number of reasons for this fall.
The report said: "One explanation is that it has become hard for organisations to justify further growth in CEO pay while the wage progression for the typical British worker has been so subdued.
"Another is that politicians have become more interested in CEO remuneration. In her speech to launch her leadership campaign last year, Theresa May highlighted and criticised the growing gap between rewards for those at the top and those who were just about managing."
The report expressed concern that if the government stops focusing on this issue, executive pay will begin growing again, undermining efforts to improve productivity.
The data found the ratio of chief executive pay to employee pay is 129:1, so for every £1 a worker on the median salary receives, a FTSE 100 chief executive receives £129.
This ratio has narrowed when compared with 2015, when for every £1 received by an employee on the average salary, the chief executive typically received £148.
A spokesperson for the Investment Association said: “The fall in CEO’s pay packages shows that FTSE 100 companies are listening to the demands of their shareholders and this is a welcome step in restoring public confidence in executive pay.
"Executive pay must be aligned with the long-term interests and strategy of the business, with senior executives being rewarded for successful performance over the longer term.
"As such, we have called for simpler pay structures and the publication of pay ratios, so that companies clearly justify why their pay structures and overall levels of pay are appropriate to their business.
"We have seen some companies working in the right direction this AGM season, with several FTSE 100 companies taking into account pay levels when setting their new pay policies. We want to see this trend continue.”
Despite the downward trend, there were some exceptions with AstraZeneca's Pascal Soriot receiving a total pay package of £13m, £5m more than last year and Carnival's Arnold Donald seeing his package almost quadruple to £22m despite his company being ordered to pay £32m relating to its deliberate pollution of the seas and intentional acts to cover it up.