Boardroom pay rises ahead of inflation despite pressure for restraint

Boardroom pay is continuing to rise ahead of inflation despite attempts by the government to persuade Britain's top management to lead by example on the pay front.

Boardroom pay is continuing to rise ahead of inflation despite attempts by the government to persuade Britain's top management to lead by example on the pay front.

According to a report by Watson Wyatt, an independent pay consultancy, earnings for chief executives have risen by 6.5 per cent over the past year.

There is also little sign of chief executive pay becoming linked to performance, the firm says in its latest annual Remuneration Committee Report.

Roger Down, a director of Watson Wyatt's human capital group, said that in Britain performance-led remuneration accounts for one-third of total packages, a far smaller proportion than in the United States. "Our research shows that among high-technology businesses in the US, basic salary accounts for just 18 per cent of directors' total remuneration - the remainder being performance linked. For US companies generally, about two-thirds of pay is performance related," he said.

A number of firms are still at odds with guidelines recommended by the Department of Trade and Industry in its consultation document on directors' remuneration.

Of the 58 UK companies surveyed, 64 per cent still had non-executive chairmen sitting on their remuneration committees in spite of government criticism of the practice. One in four chief executives still have service contracts of two or more years. The government is pushing for 12 months to be the maximum.

Of the companies surveyed 25 were in the FTSE 100, with another 18 drawn from the FTSE 250.