The pay packets of directors of Britain’s top 350 companies jumped by four times the growth in average earnings last year, increasing the pay gap the boardroom and shop floor.
Incomes Data Services' (IDS) Directors' Pay Report 2004 found that the average total remuneration received by directors of the UK's 350 leading firms rose by 16.1 per cent in the 12 months to 30 June 2004.
Average total earnings of all employees increased by only 4.3 per cent over the same period.
The IDS analysis found that the CEOs of FTSE 100 companies earned a basic salary of £625,000 last year, with incentives and bonuses talking their total remuneration to £1.2m.
The average basic pay of a FTSE 250 CEO was £351,000, rising to £583,337 after other bonus payments.
The figures are broadly in line with data published last week by accountancy firm KPMG, which found that average pay of FTSE 100 CEOs hit £1.5m in 2003 and that their average pay – excluding bonus payments - had risen by eight per cent last year.
But while the KPMG survey suggested that basic pay rises could fall to four per cent next year, the IDS report highlights that the story is very different once incentives and bonus payments are taken into account.
The average value of directors' annual bonuses across all FTSE 350 companies was 76 per cent of salary, a 12.2 per cent increase on the previous 12 months, IDS found.
And the IDS survey also highlights just how far the pay gap between the boardroom and other employees has widened over the past few years.
It found that the directors of FTSE 350 companies today have an average salary of £213 for every £100 of wages paid to them in 1998. In contrast, UK managers and professionals receive only £127 for every £100 of salary they earned in 1998.
According to Steve Tatton of IDS, the surge in boardroom pay over the past year has come about in spite of, or possibly because of, the greater involvement of institutional investors in shaping remuneration policies.
"If the Government hoped that more involvement by investors would dampen down boardroom excess then the expectation has turned out to be misplaced," he said.
"This is partly because the intent behind the drive for greater corporate governance has always been ambiguous. It is not clear whether the aim is simply to prevent corporate abuse or to curb top pay levels."