Executive pay surges 40pc in just one year

Sep 25 2006 by Nic Paton Print This Article

The average pay of a FTSE-100 chief executive in Britain has risen by nearly 40 per cent in the past year, and now tops £3m, according to new reports.

A report in yesterday's Sunday Telegraph newspaper said a forthcoming study from Income Data Services of annual accounts for 87 of the FTSE-100 companies has concluded that chief executive remuneration now stands at £2,864,282.

But this figure excludes pension contributions, which take the whole package over the £3m mark, it said.

With the average UK salary now standing at £22,500, this meant a FTSE-100 chief executive was now worth the pay of 127 workers, said the paper.

It also criticised the widespread granting of lucrative bonuses for performances that are not by any stretch of the imagination above average.

Philip Hampton, chairman of supermarket chain Sainsbury's, told the newspaper: "When I started earning bonuses you had to have a fabulous performance to get one. Now you can pick one up for something quite pedestrian Ė just doing what is expected."

At the same time, research in yesterday's Mail on Sunday newspaper has suggested that chief executive pay remains wildly out of line with company performance.

This is despite the introduction five years ago of regulations designed to create a clear link between directors' rewards and shareholders returns.

More than 40 out of 56 FTSE-100 bosses researched by consultancy Patterson Associates for the newspaper failed to deliver any shareholder value in the past five years, yet they pocketed an average of £10.7m, it said.

The most out of line, it said, was the chief executive of advertising group WPP, Sir Martin Sorrell, who earned a total of £55m at the same time as the company lost value.