The chief executives of Britain's biggest companies enjoyed average bonuses of more than £500,000 and pay increases of at least 7 per cent last year, despite the recession that has plunged businesses into gloom.
The typical boss of a FTSE 100 company pocketed a bonus of £502,000 for the financial year to April, a survey by Incomes Data Services reveals today. Though the figure was 29 per cent lower than the year before – the first time in a decade that chief executives' bonuses have fallen – IDS said the size of the pay-outs would still surprise many people.
It also pointed out that at many companies, chief executives were compensated for smaller bonus payments by much higher basic salaries, with the typical boss given a 7.4 per cent rise. As a result, the average FTSE 100 director's total remuneration package last year was just 1.5 per cent lower. Chief executives are still earning just as much as they did in 2006, when the economy was still strong.
The continued payment of large bonuses to business leaders is not only confined to the biggest companies. The average chief executive of a FTSE 350 company earned a bonus of £283,000 last year, IDS found. "What is surprising is that the credit crunch, which has led to some of the biggest rescue rights issues in living memory, has had so little impact on the rate at which chief executives' salaries are rising," said Steve Tatton, editor of the IDS's report on directors' pay. "Salaries for FTSE 100 chief executives are rising twice as fast as salaries for shop-floor workers."
The IDS survey threatens to revive the row over boardroom pay, which has seen a noticeable increase in shareholder revolts this year. A series of companies have seen investors register protest votes against remuneration packages for directors, even voting them down in some cases.
Royal Dutch Shell, for example, suffered the worst revolt over pay in British corporate history earlier this year, when almost 60 per cent of its shareholders voted against its remuneration report.
However, IDS said many directors evaded scrutiny by accepting much lower bonuses in return for big pay rises. "While bonuses are often linked to performance, remuneration committees have more flexibility over salaries," added Mr Tatton. "This has led to the slightly odd situation of salaries continuing to rise at several times the rate of inflation, even as bonuses collapse."
Not even bankers have missed out. Chief executives of FTSE 100 financial services companies enjoyed average pay increases of 5.7 per cent last year.