Boardroom pay rises by a third

Aug 29 2007 by Nic Paton Print This Article

Bosses at Britain's biggest companies saw their pay rise by more than a third last year, with the average total package for a chief executive now nudging the £3m mark.

The annual survey of boardroom pay by The Guardian newspaper concluded that worries about "fat-cat" executive pay were still taking a back-seat within British boardrooms.

Full-time directors at Britain's top companies had seen "inflation-busting" increases in their basic salary, big cash bonuses and substantial payouts from share schemes, it said.

Boardroom pay rose by 37 per cent last year, or more than 11 times the increase in average earnings and nearly 20 times the rate of inflation, it added.

The average total pay for a chief executive was now £2,875,000, meaning the ratio between bosses' rewards and employees' pay was now 98:1, up from 93:1 a year ago.

This meant the work of a chief executive was valued almost 100 times more highly than that of their employees, the left-leaning newspaper said.

The research looked at executive pay at the 100 biggest companies on the UK stock market and was conducted in association with the pay consultancy Reward Technology Forum.

The pay rise for the 2006/07 financial year was the biggest in recent years, up from 28 per cent in last year's poll, and from 16 per cent and 13 per cent respectively in the years before.

For the first time last year the rewards handed over to the directors of FTSE-100 companies topped £1bn, the survey added.

Topping the list was Bob Diamond, head of the investment banking arm of Barclays Bank, who earned £23m last year, said the newspaper.

Other top earners included Bart Becht, chief executive of consumer goods firm Reckitt Benckiser, and Giles Thorley, boss of the Punch Taverns pubs group, who earned £22m and £11m respectively last year.

Part-time chairmen of top companies now earned an average of £311,000, up 15 per cent on a year ago, said the survey.

The highest paid woman Ė with a pay package of £2.1m Ė was Dame Marjorie Scardino, chief executive of publishing group Pearson.

She and Dorothy Thompson of the Drax power station company were the only two female chief executives in the survey period and their salaries lagged behind their peers by 25 per cent and 75 per cent respectively, said the paper.

There were only 16 female full-time executive directors of FTSE-100 companies out of a total 527 such posts, it added.

The 37 per cent increase was fuelled by annual cash bonuses and gains from long-term, share-based incentives, the research said.

Basic boardroom salaries only rose by 5 per cent. Including cash bonuses and other benefits the average increase lifted to 13 per cent, but it was stock market gains that provided the bumper returns, it added.