Top directors’ pay leaps by 49 per cent
Directors in top companies received a 49 per cent pay rise in the last year, despite minimal growth in their companies, says a new study.
Income Data Services (IDS) analysed the pay for directors in FTSE 100 companies and found that the average salary is just under £2.7m.
That marks a 49 per cent increase since last year, including salary, benefits and bonuses. For bonuses alone, payments had increased by 23 per cent since 2010 – from £737,000 to £906,000 this year.
Directors see higher rise than bosses
Directors, who work under chief executives in the FTSE 100 companies, saw a higher pay rise than their bosses, who tabled a 43 per cent increase.
The average chief executive salary is now £3.8m. Finance directors saw a 34 per cent increase to an average annual salary of over £2m.
Britain’s economy may be struggling to return to pre-recession levels of output, but the same cannot be said of FTSE 100 directors’ remuneration. Steve Tatton, IDS
Steve Tatton of IDS and the report editor said:”Britain’s economy may be struggling to return to pre-recession levels of output, but the same cannot be said of FTSE 100 directors’ remuneration.
“The generous remuneration packages that FTSE-100 directors now receive indicates a marked improvement in boardroom fortunes.”
He added that closer scrutiny of boardroom pay is expected in the future, where remuneration committees will be obliged to be more transparent about how total benefit packages are structured.
Salaries increase more than profit
The report highlighted the contrast between executive directors’ salary increases, and the comparatively small rise in their companies’ profits.
While directors of FTSE 100 companies enjoyed a 49 per cent rise in salaries, their companies only saw a 3 per cent rise in the last business year – from April 2010 to March 2011. Since then it has fallen over 3 percent, meaning the index has gained no ground at all over the last 20 months.
The average total earnings of all FTSE 350 executive directors went up by 108 per cent between 2000 and 2010. For the same period, the value of these same companies went up by 8 per cent.
“More simply, FTSE 350 directors’ earnings grew nearly 14 times faster than the value of their companies,” the report reads, appearing to disprove arguments that pay increases are related to performance.
Another trend in FTSE 350 companies was that while base pay has been held down, the incentives, such as bonuses and benefits, have been going up.
The top earning FTSE 350 chief executives:
Mick Davis, Xstrata £18,426,105
Bart Becht, Reckitt Benkiser £17,879,000
Michael Spencer, ICAP £13,419,619
Sir Terry Leahy, Tesco £12,038,303
Tom Albanese, Rio Tinto £11,623,162
Sir Martin Sorrell, WPP Group £8,949,985
Todd Kozel, Gulf Keystone Petroleum £8,913,223
Don Robert, Experian £8,601,984
Edward Bonham Carter, Jupiter Fund Management £8,003,641
Dame Marjorie Scardino, Pearson £8,003,641
‘Elite greedy pigs’
The GMB union was outraged at the findings, saying they highlighted the stark contrast between average earnings for workers, which have fallen, and those in Britain’s top companies.
“This is another shining example of how the elite, greedy pigs who run our top companies behave,” said Paul Kenny, the union’s general secretary.
FTSE 350 directors’ earnings grew nearly 14 times faster than the value of their companies. IDS report
“The fall in living standards for the majority means that the government’s strategy for an economic recovery is in tatters as two-thirds of the economy is consumer driven.”
JD Sports CEO sees 59 per cent increase
The report highlighted the earning of the executive chairman at JD Sports Fashion, a company in the mid-250 of the FTSE, whose base pay rose by more than 59 per cent.
The company’s remuneration committee said: “The salary increase was necessary to ensure the retention of the executive chairman and that his ongoing retention is critical in enhancing shareholder value.”
The chairman’s salary rate increased from £422,742 to £700,000 on 1 April 2010.