Yet Camelot, the operator of the National Lottery, is a major target of criticism for excess profits and accusations of fat cattery against its directors.
Research prepared by the Monks Partnership, a leading executive pay consultancy, sheds some light on the situation, while suggesting that broadly speaking, the executives may be being paid a fair going rate for their services in terms of how senior directors of quoted companies are rewarded.
The problem lies in trying to find a suitable benchmark for such a peculiar beast as Camelot. Sales of over pounds 5bn suggest an enormous behemoth, but in reality the company achieves that on negligible assets of a mere pounds 70m, and a staff of just over 600. Shareholders' funds are a paltry pounds 145m. Any businessman in Britain would give their eye teeth for such massive returns from this tiny base.
For these achievements chief executive Tim Holley was paid pounds 284,000 in salary, a pounds 126,000 bonus, and was granted another pounds 202,000 from a long- term incentive plan, which with other payments make a total of of pounds 636,000, up from pounds 590,000 the previous year.
His colleague, Peter Murphy, the finance director and director of business operations, earned pounds 429,000, which included pounds 175,000 in salary, pounds 79,000 as a performance-related bonus and pounds 127,000 from a long-term incentive plan.
The regulated utilities can boast similar sales to Camelot. They also have in common remarkable natural monopolies, which have required the appointment of a tough regulatory regime to prevent exploitation of the consumer. However, any comparison ignores the massive infrastructure in which the utilities operate, as well as the substantial capital investment programmes they run to maintain and upgrade assets.
In this category The Energy Group, National Power, PowerGen, Scottish Power and United Utilities are all likely candidates for comparison.
The average earnings for the chief executive or executive chairman in this group came in at pounds 331,000, with a bonus on top worth 32 per cent of base salary.
On base salaries, the Monks Partnership finds that Camelot is not overpaying - both the chief executive and the finance director's base salaries are around 85 per cent of the utility bosses' wages. That, however, ignores the effect of the controversial long-term incentive plan run by Camelot for its senior executives. This was to compensate for the absence of shares in the business, while the directors recruited to run Camelot had to forfeit share option schemes at their previous employers.
The scheme has now been dropped, and last year's contribution was the final payment to be made from it. It has been replaced by a long-term loyalty scheme, which kicks in during the year 2001 if Camelot retains its licence when it comes up for renewal.
Finally, one can look at stock-market companies whose pre-tax profits are broadly in line with Camelot's. Last year, Camelot made pre-tax profits of pounds 80.9m.
The Monks Partnership found 11 companies with pre-tax profits ranging from pounds 70m to pounds 90m - from house builder The Berkeley Group to construction company Taylor Woodrow.
In this group, the chief executive's base salary is on average pounds 275,000, which is further topped up by a performance-linked bonus worth 31.7 per cent of salary, taking total earnings to pounds 372,300. David Atkins, of the Monks Partnership, says the figures show a remarkable similarity with those of Camelot.
While these findings may provide some small comfort for the board of Camelot, they are unlikely to appease its critics.
Neil Moister, of the independent Labour Research, says that there are too few guidelines as to how top directors should be remunerated. "Directors still seem to find new ways of lining their pockets," he said.Reuse content