Profits are plunging, but exec pay is rising

LONDON: Executives at Britain’s top companies saw their basic salaries leap 10 per cent last year, despite the onset of the worst global recession in decades in which their companies lost almost a third of their value.

The annual survey of boardroom pay reveals that the full and part-time directors of the FTSE 100, the premier league of British business, shared between them more than £1 billion.

Bonus payouts were lower, but basic salary hikes were more than three times the 3.1 per cent average pay rise for ordinary workers in the private sector. The big rise in directors’ basic pay — more than double the rate of inflation last year — came as many of their companies were imposing pay freezes and starting huge redundancy programmes to slash costs.

The data also shows that a coterie of elite bosses at the helm of multinational corporations are seeing their overall pay packets soar ever higher. The 10 most highly paid executives earned a combined £170 million last year — up from £140 million in 2007. Five years ago, the top 10 banked some £70 million.

The average chief executive of a blue-chip company now earns a basic salary of £791,000. However, adding bonus payments, share awards and the value of perks ranging from cars and drivers to school fees and dental work, the average pay package rises dramatically. Nearly a quarter of FTSE chief executives received total 2008 pay packages in excess of £5 million, and 22 directors now have basic salaries of more than £1 million.

The survey is likely to spark renewed calls for shareholders to take a tougher line to control boardroom pay. Earlier this year, the UK government minister with responsibility for the financial industry City’s Lord Myners accused shareholders of behaving like ‘absentee landlords’.

Some of the City’s biggest and most influential shareholders are also part of the problem — their bosses are among those raking in multimillion-pound salaries. Michael McLintock, a director of the Prudential and the boss of its investment arm, which holds big stakes in thousands of companies, was last year paid £6.6 million — putting him among the 25 best-paid bosses in the UK.

The highest paid boss last year was Bart Becht, the chief executive of household goods group Reckitt Benckiser. He was rewarded with £36.8 million in pay, bonuses, perks and share incentive schemes. Becht, 53, has been a regular feature in the the annual Guardian survey for several years, earning over £80 million in the last three years.