1. SIR PETER BONFIELD, BT
Total remuneration: £3.1m
Shareholder return -71.4%
The former head of BT left the telecoms giant last year with a pay-off worth nearly £3m, after presiding over a collapsing share price and after the firm had ratcheted up debts of nearly £30bn. Once one of the City's darlings, Sir Peter's compensation for stepping down was made up of £1.5m in severance pay, £1.3m in share awards payable over three years, and a £350,000 contribution to his pension pot. The awards came after the company carried out a £6bn rescue rights issue in 2001. It also had to sell off various assets to sort out its finances after a string of purchases, signed off by Sir Peter, which had been bought at sky-high prices.
Its Yellow Pages directories business, Yell, was sold to a venture capital consortium and BT also disposed of a raft of telecoms assets, including interests in Japan Telecom, Airtel of Spain and Maxis of Malaysia. It also demerged its Cellnet mobile phone operation, which has since been renamed mmO2.
Sir Peter's successor – the Dutchman Ben Verwaayen – took over the helm on 1 February 2002, at an annual salary of £700,000 – slightly less than the £780,000 Sir Peter was paid per year. Mr Verwaayen, who joined BT from Lucent Technologies in the US, also received a "golden hello" of £1m-worth of company shares.
2. SIR CHRISTOPHER GENT, VODAFONE
Total remuneration: £3.78m
Shareholder return -54.5%
Vodafone's chief executive has watched over the mobile phone giant during some of its greatest moments – and its darkest hours. After a 17-year stint at the company, he officially steps down from the top spot in July.
Known for his trademark pin-stripe suit and braces, Sir Christopher oversaw more than £150bn worth of acquisitions at Vodafone, including the £43bn purchase of AirTouch and the £101bn acquisition of Mannesmann – a deal for which he gained a controversial £10m bonus.
Vodafone was one of the best-performing shares in the FTSE a few years ago, but the last three years have been more rocky, as, along with other players in the sector, it has been hit by the global downturn in media and technology companies.
Constant carping about Sir Christopher's pay was, no doubt, an element in his decision to retire, although the cricket-loving executive was also keen to spend more time with his wife and four children.
His successor, Arun Sarin, started at the firm as chief executive designate in April. Sarin earns a base salary of £1.1m a year along with incentives "which have the same structure and quantum" as Sir Christopher's.
3. JOHN WESTON, BAE SYSTEMS
Total remuneration: £2.52m
Shareholder return -63.2%
John Weston was by far by the best-paid director at Britain's biggest arms manufacturer last year, receiving a total package worth £1.6m. However, £1.46m of that was a severance payment made to Weston after he was unceremoniously jettisoned as chief executive in March 2002. The company – which recorded a £616m loss in 2002 – said that he had lost the confidence of both his fellow directors and the Ministry of Defence. In fact, he was a victim of an old-fashioned boardroom bust-up with BAE's domineering chairman Sir Dick Evans, who wasn't quite ready to hand over the reins of power. BAE's shares have been one of the worst performers in the FTSE100 index over the last year, losing two-thirds of their value. But the damage was done by two devastating profit warnings delivered after Weston had left the company.
A diffident man, he has not resurfaced in any high-profile corporate job since. He may never do so – since he was allowed to take early retirement with a pension pot worth £4m.
4. IAN HARLEY, ABBEY NATIONAL
Total remuneration: £3.53m
Shareholder return -31.3%
If ever there were an example of "payments for failure" in British boardrooms last year, many would say that the case of Ian Harley, former chief executive of Abbey National, is the worst. Harley, who headed Abbey for five years, walked away with nearly £1.7m when he was ousted from the top job last July, despite presiding over Britain's sixth biggest high-street bank in a year when it announced a £1bn loss. As well as leading Abbey National into some ill-fated ventures, such as risky corporate lending, Harley was also criticised by the City for fighting a proposed merger with Lloyds TSB.
Abbey National's embarrassed new management, which is trying to sell off assets in order to raise some much-needed cash, explained that there was nothing they could do about Harley's pay-off; they were contractually obliged to hand over one year's salary (£687,000) in compensation, plus a £372,000 bonus. Harley, 53, also received a £560,000 payment into his final-salary pension scheme.
5. LORD BROWNE, BP
Shareholder return -23.8%
Britain's best-paid oilman took home £3m last year, yet he is modestly rewarded by US standards. On top of his basic pay, Lord Browne received a shares payment worth £883,000 under BP's incentive scheme. This was down from £2.7m the previous year, reflecting poorer performance. A lifelong BP employee, Lord Browne has transformed the company into one of the world's top three oil majors by taking over rivals. But his reputation took a knock last year as BP stumbled from one missed production forecast to the next. What does he spend his own money on? Hard to say. He has homes in London and near Cambridge, but he has never married and shows few signs of ostentation.
6. JEAN-PIERRE GARNIER, GLAXOSMITHKLINE
Shareholder return -27.5%
Says top executives need pay packages that prevent a brain-drain to the US. But last year shareholders rejected a doubling of his annual pay and bonus. Garnier also suffered one of the UK's biggest revolts over the terms of his contract. This offers him a potential "reward for failure" that could top £23m. His extraordinary severance package includes two years' salary and a pension top-up, and would grant free shares for three years after he leaves.
City condemnation is coupled with dismay that he did not move to the UK from Philadelphia on taking the helm at GSK. And the jury is out on his reforms of research, with investors worried GSK is failing to find the blockbuster drugs of tomorrow.
7. SIR PHILIP WATTS, SHELL
Shareholder return -21.2%
A bluff, sometimes abrasive businessman, Shells' chairman enjoyed a 55 per cent increase in his basic pay package last year, even though the oil giant's profits fell by almost a quarter. Excluding one-off gains from the exercise of share options, Sir Philip's remuneration rose by £635,000 to £1.793m. His salary increased by 23 per cent to £746,000 (in 2001, Sir Philip was only chairman for half the year, which partly explains this increase) while his annual bonus virtually doubled to £874,000. Including one-off share option gains, his total package came to £1.8m compared with £1.67m in 2001. Yet the 23 per increase in base salary was matched by a 23 per cent decrease in profits for the year to $9.2bn.
8. CHARLES BRADY, AMVESCAP
Shareholder return -56%
Charles Brady, 68, the head of the Anglo-American money manager, has come far. From Atlanta, he worked to put himself through university. Brady was a founder of the original Invesco: Amvescap was created in 1996 and has become the world's biggest independently quoted fund manager. Earlier this year it emerged that Brady was one of the best-paid FTSE 100 chief executives. That is partly because he livesin the US, where salaries are far higher, but the company has been hit by the slump in share prices. This was reflected in the cut in Brady's salary from £3m in 2001. The £2m he took home last year helped to pay for hobbies such as old books, riding, fishing and golf.
9. TONY BALL, BSKYB
Shareholder return -48.1%
Smooth, articulate and tough, Tony Ball is the latest in a series of hard men who have been chief executive of BSkyB, the satellite television operator 38 per cent-owned by Rupert Murdoch's News Corporation. Ball has seen to it that BSkyB has achieved all the targets it has set in growing the company's main domestic business – that of running the most successful pay television outfit in the UK – but that success has not yet led to anything other than pedestrian shareholder returns.
BSkyB's remarkable pre-eminence in the UK market has come at a cost. It has spent millions in subsidising set-top boxes for digital television and it has paid handsomely for sports rights.
10. TOM GLOCER, REUTERS
Shareholder return -84.7%
When Tom Glocer, an American, was promoted to chief executive of Reuters in 2001, his mission was to save the sleepy media giant, which had outdated products, poor marketing, and was being overtaken by its rival, Bloomberg. He came up with restructuring plans, the latest called "fast forward", though critics said it was more like "eject". He has cut 5,500 jobs, saying that this will make Reuters more efficient, better able to cope with a collapse in revenues due to cutbacks from clients in the financial-services industry. The argument has been hard to swallow for shareholders, considering that Glocer's contract would see him collect a two-year pay-off worth £2m if ousted.
11. MICHAEL BAILEY, COMPASS
Shareholder return -33.7%
Three years after Mike Bailey helped to catapult Compass into the world's top catering slot by merging and then demerging with Granada, the chief executive still has some explaining to do. The deal destroyed a premium rating enjoyed by Compass for more than a decade. That didn't stop Bailey, 54, from pocketing £2m last year, half of which comprised a performance-related bonus.
12. MICHAEL DOBSON, SCHRODERS
Shareholder return -33.9%
The genteel manner of Michael Dobson, chief executive of Schroders, belies his razor-sharp ability to find a good deal. The patrician City veteran who took over at the helm of the struggling fund-management group in November 2001 collected nearly £3m last year, including £2m in salary and cash bonus, and approaching £1m in share options. Whatever happens, his package for next year will include another guaranteed cash bonus of £1.8m.
13. DAVID PROSSER, LEGAL AND GENERAL
Shareholder return -43.5%
Supporters of David Prosser, the chief executive, say the wily Welshman has done well during a stock-market collapse that has taken life insurance rivals to the brink of insolvency. But the relative strength of the low-cost savings group did not satisfy shareholders, who contrasted Prosser's £1.35m pay package last year (and £6.6m pension pot) with Legal & General's lowly share price and the 20 per cent fall in pay-outs from typical life insurance policies.
14. SIR TERRY LEAHY, TESCO
Shareholder return -0.6%
Sir Terry hails from Liverpool and was just 39 when he was named Tesco's chief executive in 1997. Now 46, the straight-talking high-flier has established Tesco as Britain's biggest supermarket group, and begun building significant businesses in central Europe and in the Far East. Tesco has always been a good payer and Sir Terry saw his pay leap to £2.8m last year.
15. JOHN SUNDERLAND, CADBURY SCHWEPPES
Shareholder return -14.2%
John Sunderland was the chief executive of Cadbury Schweppes for seven years, before becoming chairman last week. During his tenure the group has munched up a sweetie-shop's worth of chocolate, chewing-gum and fizzy-drinks makers. But the stock market has indigestion, and while the 56-year-old pocketed a tasty salary worth £1.5m, its shareholders are looking somewhat leaner.
16. SIR GEOFFREY MULCAHY, KINGFISHER
Shareholder return -36.1%
Sir Geoff Mulcahy spent 20 years at the top of Kingfisher until his departure late last year. He founded the retail empire with the buy-out of Woolworths in 1982, and went on to snap up B&Q, Superdrug and Comet. Kingfisher shares performed well but the City lost faith in Sir Geoff owing to strategic dithering. Sir Geoff, now 60, has an annual pension of £790,000, having built up a pension "pot" of £15m.
17. RICHARD HARVEY, AVIVA
Shareholder return -44.4%
Richard Harvey, 52, has been group chief executive of Aviva, the UK's largest insurance company, since April 2001, and with the company since 1992. The vehement anti-smoker, who is rumoured to give a proportion of his salary to the Church, braved a 40 per cent slash in the company's dividend last year, from which the share price has struggled to recover. Though unpopular, the move may have saved the insurer enough cash to survive the bear market.
18. CHARLES ALLEN, GRANADA
Shareholder return -72.3%
Charles Allen, 46, is the executive chairman of the largest part of the ITV network. He has been trying to put together a merger with Carlton. His position at Granada, which he has chaired for two years, has been under constant attack, first over the ITV Digital failure, then the difficulty of getting the Carlton merger agreed. Most recently, there has been disquiet at the £2m pay-off he would be entitled to under his two-year contract were he ousted.
19. GRAHAM WALLACE, CABLE AND WIRELESS
Shareholder return -89.9%
The chief executive of Cable & Wireless is still thrashing out his severance package four weeks after clearing his desk. Wallace, who had been at the helm since early 1999, came under intense shareholder pressure to quit after presiding over four profit warnings that saw shares in the firm plummet. Under the terms of his two-year contract, Wallace will be entitled to a pay-out approaching £2m.
20. SIR TOM McKILLOP, ASTRAZENECA
Shareholder return -3.1%
Sir Tom McKillop, 59, is chief executive of AstraZeneca, the drugs giant that this month was forced to defend executive bonuses. A small shareholder questioned an extra £1m pay-out in bonuses, with £510,000 going to Sir Tom himself, with no increase in the dividend to shareholders. The company insisted they were fair. Sir Tom, a trained scientist, is said to be happiest in the lab.
21. ROGER URWIN, NATIONAL GRID TRANSCO
Shareholder return -16.6%
A dull company led by a colourful chief executive. Roger Urwin was in the news last year after the husband of a senior employee at the Grid told the company's annual meeting about an affair she was having with Urwin. He received an 82 per cent pay rise last year to £794,000, but part of the increase was due to him being promoted to the chief executive's job during the year.
22. ANTHONY ISAAC, BOC
Shareholder return -8.1%
The chief executive of the industrial gases firm BOC has not had an easy time of it this year after admitting that the BOC Edwards division, which supplies the semiconductor industry, was back in the doldrums. The alert came after a furore over executive pay at the firm's AGM. Isaac was paid £1.8m last year, after getting more than £1m in bonuses, even though the company saw pre-tax profits drop to £335m for the year to 30 September 2002 from £362m.
23. SIR ROY GARDNER, CENTRICA
Shareholder return -22.5%
As chief executive of the company with more customers than any other British firm (Centrica owns British Gas, the AA and Goldfish), Sir Roy earned £1.1m last year – 30 per cent up on 2001. If he had stuck to his first love, football, his career might have been even more lucrative: he had schoolboy trials with Queen's Park Rangers. These days he satisfies his love of the beautiful game by being chairman of Manchester United in addition to his day job.
24. MICK DAVIS, XSTRATA
Shareholder return -42.5%
The chief executive of the mining group Xstrata has a lot on his plate, if reports that the firm's attempt to buy the Australian giant MIM Holdings is running into trouble are to be believed. Xstrata is also looking to raise £901m through a rights issue of shares to finance the £2.1bn acquisition. Daviespreviously worked at Eskom, the South African electricity utility.
25. MARJORIE SCARDINO, PEARSON
Shareholder return -69.1%
Marjorie Scardino is Britain's premier businesswoman. In five years at the helm of Pearson she successfully sold off many of the company's disparate collection of assets, focusing on three areas: the Financial Times, Penguin books and a US school textbook business. However, her reputation has taken a battering as she failed in her pledge to double Pearson's share price over those five years.Reuse content